ASSET PURCHASE AGREEMENT
THIS AGREEMENT, made this 1st day of November 2001, by and among ▇.▇.
▇▇▇▇▇▇ Group, Inc., a Delaware corporation ("Buyer"), and On-Site Trading, Inc.,
a Delaware corporation ("Seller").
W I T N E S S E T H:
WHEREAS, Buyer desires to purchase and Seller desires to sell certain
assets of the Seller, and Buyer intends to assume certain liabilities of Seller,
on the terms and conditions as set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual agreements,
covenants, representations and warranties hereinafter set forth, the parties
agree as follows:
ARTICLE I
ASSETS
1.1 Assets to be Sold. In reliance upon the representations, warranties and
agreements of the parties hereto contained herein, Seller does hereby sell,
transfer and convey to Buyer, and Buyer hereby purchases, the Assets, as
hereinafter defined, free and clear of all liens, charges and encumbrances
(other than Permitted Encumbrances [as defined below]), and Buyer does hereby
assume and agree to pay certain liabilities, loans or debts of the Seller, as
hereinafter set forth, that are specifically being assumed by the Buyer
hereunder.
1.2 Assets. The term "Assets" shall mean the following assets of Seller:
(1) All tangible and intangible assets related to the accounts of
public customers carried by Seller ("Customer Accounts"), including, without
limitation, all information of the customers kept in the ordinary course of
Seller's business, including, but not limited to, any
information and records obtained and/or retained by Seller to comply with NASD
rules and regulations.
(2) All of Seller's tangible and intangible interests in the branch
management agreements ("Branch Management Agreements") listed on Schedule 1.2(2)
annexed hereto and made part hereof, to the extent such Branch Management
Agreements are not terminated upon the Buyer's entering into new agreements
directly with the managers of such branches at or prior to the Closing.
(3) All of Seller's class A interest ownership in On-Site Trading LLC,
a New York limited liability company ("OSTLLC").
(4) Any contracts, agreements, leases, arrangements, commitments and
understandings, whether written or oral, related to the Assets being acquired
pursuant to Section 1.2(1) - (3) and 1.2(5) - (10), including but not limited to
contracts with vendors or licensors which are listed on Schedule 1.2(4) annexed
hereto and made part hereof (collectively, the "Agreements").
(5) The name "On-Site Trading" or "On-Site" to the extent possessed by
Seller, and other intangible assets relating to or used in connection with the
Assets being acquired hereunder (collectively, "Intangible Assets"), to the
extent listed on Schedule 1.2(5) annexed hereto and made part hereof.
(6) The furniture and fixtures owned by the Seller located at its Great
Neck, New York and Boca Raton, Florida offices (The "Company Offices") and, to
the extent owned by Seller, at its branch offices governed by the Branch
Management Agreements.
(7) All machinery, computers, telephone and other office equipment
owned by Seller and located at the Company Offices and, to the extent owned by
Seller, at its branch offices governed by the Branch Management Agreements.
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(8) The Leases for the Company Offices set forth on Schedule 1.2(8)
(the "Office Leases"), including the security deposits set forth on Schedule
1.2(8), but Buyer shall promptly, following landlord's consent to assignment,
pay to Seller the total amount of such security deposits.
(9) The rights of Seller against Liebert Global Services with respect
to the malfunction of certain routing and switching equipment, but the Assets
shall not include any business interruption insurance claims, other insurance
claims or other claims against third parties of the Seller whatsoever.
(10) All licenses, permits and authorizations issued by any
governmental authority relating to the Assets that are assignable or capable of
being transferred (collectively the "Permits").
(11) The Branch Management Agreements, the Agreements and the Office
Leases are collectively referred to as the "Assumed Contracts."
1.3 Permitted Encumbrances. "Permitted Encumbrances" means (1) liens and
other like encumbrances for taxes not yet due or being contested in good faith
and by appropriate proceedings, so long as adequate reserves therefor have been
established on the books of Seller, (2) any and all encumbrances set forth on
title reports and/or lien searches for operating leases, (3) mechanics' liens,
materialmen's liens, workers' liens, repairmen's lien, employees' liens and
other like encumbrances arising in the ordinary course of business for amounts
either not yet due or being contested in good faith and by appropriate
proceedings so long as adequate reserves therefor have been established on the
books of Seller, and (4) easements, rights of way, reservations, servitudes and
other restrictions upon any assets of the Seller that are immaterial in
character and amount and do not detract from the value or interfere with the use
of the assets they affect.
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ARTICLE II
PRICE AND TERMS
2.1 The Common Stock. Concurrently herewith, Buyer shall issue to Seller an
aggregate of 1,875,000 shares of its authorized but previously unissued shares
of common stock, par value $.001 per share (the "Common Stock") and shall assume
the Assumed Liabilities (as hereinafter defined). The Common Stock shall be
represented by three separate certificates registered in the name of Seller in
the respective amounts of 937,500 shares (the "Closing Certificate"), 468,750
shares (the "Escrow Certificate") and 468,750 shares (the "Deferred Payment
Certificate"). The Closing Certificate shall be transferred and delivered to the
Seller concurrently herewith and the Escrow Certificate and the Deferred Payment
Certificate shall be delivered to Singer Frumento LLP (the "Escrow Agent") as
hereinafter provided. The Common Stock issued shall bear a restrictive legend
stating that the Common Stock may not be sold except in accordance with the
Securities Act of 1933, as amended (including the rules and regulations
promulgated thereunder, the "Securities Act"), and the Securities and Exchange
Act of 1934, as amended (including the rules and regulations promulgated
thereunder, the "Exchange Act"), or an exemption therefrom, which exemption
shall be supported by an opinion of counsel to Seller in form acceptable to
counsel for Buyer.
2.2 Permitted Transfers. Seller shall have the right to transfer some or
all of the Common Stock (including, when and if delivered to Seller by the
Escrow Agent, shares represented by the Escrow Certificate and the Deferred
Payment Certificate) to certain creditors of Seller, provided each such
transferee delivers to Buyer a certificate confirming its investment intent
substantially in the form of Section 2.3 hereof and is otherwise in accordance
with applicable Securities laws (a "Permitted Transferee" and, collectively, the
"Permitted Transferees").
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2.3 Investment Representations. Seller represents and warrants to Buyer
that (i) it is aware that the Common Stock is unregistered, (ii) it is not
acquiring the Common Stock with a view towards public distribution, (iii) it has
had an opportunity to ask questions about an investment in the Common Stock,
(iv) it has such knowledge and experience in financial matters to evaluate the
merits and risks of an investment in the Common Stock, and (v) it can bear the
economic risk of an investment in the Common Stock.
2.4 Piggy-Back Rights of Registration.
(1) In the event Buyer shall, at any time during the four (4) year
period following the date of the Closing seek to register or qualify any of its
common stock or the common stock holdings of any of its controlling shareholders
under the Act other than through the filing of a registration statement on Form
S-8 (or any successor form), on each such occasion it shall furnish the Seller
and the Permitted Transferees, and any of their assigns or designees, with at
least thirty (30) days prior written notice thereof and they and any person to
whom any of them may have transferred any of the Common Stock (each, a "Holder")
shall have the option without cost or expense to them, to include the Common
Stock held by any such Holder and by the Escrow Agent in such registration or
qualification, with appropriate and reasonable limitations on the sale of such
shares after their registration if required by the underwriter in an underwriter
offering. Such Holders shall exercise their "piggy-back rights" by giving
written notice to Buyer and the underwriter within twenty (20) days of receipt
of written notice from Buyer. Such persons shall cooperate with Buyer and
provide Buyer with all information relating to the resale of such securities or
as necessary to comply with the Securities Act or the Exchange Act. All expenses
in connection with preparing and filing the registration statement (and any
registration or qualification under the securities or "Blue Sky" laws of all
states in which the
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offering will be made, and up to a maximum of five (5) states in which the
offering would not otherwise be made, under such registration statements) shall
be borne in full by Buyer.
(2) In the event of the registration of any shares of the Common Stock
of the Holders who have exercised their "piggy-back" rights under Section
2.4(1), such persons agree to indemnify and hold harmless Buyer, its directors,
officers, employees and agents, each underwriter, broker or dealer, if any, and
their directors, officers and employees, from and against any losses, claims,
damages or liabilities, joint or several, to which Buyer, its directors,
officers, employees or agents, may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any registration statement
under which such Common Stock were registered under the Securities Act, any
preliminary prospectus or final prospectus relating to such Common Stock, or any
amendment or supplement thereto, or any omission of a material fact that renders
the statements made materially misleading, provided, however, that such Holders
will be liable to the extent, but only to the extent, that any such loss, claim
or liability arises out of or is based upon an untrue statement or omission made
in reliance upon and in conformity with written information furnished by such
Holders to Buyer or its representatives and provided further that such Holder's
indemnification obligation shall in no event exceed the net proceeds it received
from the sale of such securities. This indemnity will be in addition to any
liability that such persons may otherwise have.
(3) Buyer will indemnify and hold harmless Seller, and each Holder
against any losses, claims, damages or liabilities, joint or several, to which
Seller or any such Holder may become subject, under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
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action in respect thereof) are caused by any untrue statement or alleged untrue
statement of any material fact contained in any registration statement under
which such shares of Common Stock were registered under the Securities Act, any
prospectus contained therein, or any amendment or supplement thereto or any
omission of a material fact that renders the statements made materially
misleading; and will reimburse Seller and each such Holder for any legal or
other expenses incurred by them in connection with investigating or defending
against any such loss, claim, damage, liability or action; provided, however,
that Buyer will not be liable in any such case to the extent that any such loss,
claim, damage, expense or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission so made in
conformity with written information furnished by the Seller or such Holder
expressly for use in such registration statement.
2.5 Status of Shares. The shares of common stock represented by each of
the Delivery Certificate, Escrow Certificate and Deferred Payment Certificate
shall represent duly issued and fully paid shares of common stock of Buyer and
shall be entitled to all of the benefits of shares of common stock of Buyer. The
shares represented by the Escrow Certificate and Deferred Payment Certificate
while the same are held in escrow by the Escrow Agent shall be voted by Seller.
In the event the holders of the common stock of Buyer shall be entitled to
exchange such shares for any other consideration in connection with an
acquisition of Buyer or otherwise, the amount of such consideration allocable to
the shares represented by the Escrow Certificate and the Deferred Payment
Certificate shall be held in escrow by the Escrow Agent in accordance with the
terms of this Agreement. If such consideration is represented by any security
which has been exchanged for shares of the common stock of Buyer, the monthly
amount of such shares to be delivered to Seller pursuant to Section 2.9 on a
monthly basis shall be determined based upon the exchange ratio applicable to
the
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transaction giving rise to such exchange.
2.6 Other Assets. Except as specifically set forth above, Seller does
not hereby sell or transfer to Buyer any other of its Assets, tangible or
intangible, contingent or otherwise, all of which shall remain the property of
Seller.
2.7 Assumed Liabilities. Buyer does hereby assume and undertake to pay
and perform all obligations of Seller under the following (the "Assumed
Liabilities"):
(1) The secured equipment loan payable to CIT Group/Equipment
Financing, Inc. ("CIT") as more particularly described in Schedule 2.7(1)
annexed hereto and made a part hereof.
(2) The amount due to OSTLLC; provided that the extent of Buyer's
obligation hereunder shall not exceed the principal amount of $1.8 million,
and provided further that Buyer shall not be obligated to pay more than
$50,000 per month plus interest at a simple rate of 9% per annum on any
unpaid balance, commencing as of November 1, 2001. To the extent this
obligation is not known as of November 1, 2001, then the monthly payment
plus interest thereon shall accrue and be paid in a lump-sum when such
amount is finally determined.
(3) All operating liabilities incurred after the Closing, in the
ordinary course of business relating to the maintenance of the Customer
Accounts including, but not limited to, short positions held at any
clearing broker or brokers in the names of any Customer as of the date of
Closing.
(4) All liabilities associated with the Assets, including under the
Assumed Contracts.
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(5) The liabilities described in subparagraphs 1-4 above are
collectively called "Assumed Liabilities".
2.8 Liabilities Not Assumed. Except as and to the extent otherwise
expressly provided in this Agreement, Buyer has not agreed to pay, shall not be
required to assume, and shall have no liability or obligation whatsoever with
respect to, any obligations or liabilities of Seller.
2.9 Escrow for the Deferred Payment Certificate. In accordance with Article
VII hereof, the Escrow Agent shall hold the Deferred Payment Certificate and
shall instruct Buyer to issue new certificates representing shares therefrom to
Seller as follows: within ten business days after the end of each full calendar
month commencing with October, 2001, the Escrow Agent shall cause to be issued
and delivered to Seller one or more certificates evidencing ownership of shares
of the Common Stock equal to a number resulting from the following formula,
rounded to the nearest whole integer:
39,062.5 times (Revenue/$1,000,000)
where "Revenue" shall mean the total monthly revenue produced as a result of the
activities of the Customers as reported by Spear Leeds & ▇▇▇▇▇▇▇, Inc. ("SLK")
plus the activities of those customers listed on Schedule 2.9 as reported by
▇▇▇▇▇▇ Financial Services Inc. ("▇▇▇▇▇▇"), in each case on a trade date basis as
of the end of the last trading day of each month, less payments related thereto
paid to managers of offices listed in Schedule 1.2(2), or such other clearing
firms or operations as may succeed SLK or ▇▇▇▇▇▇ in clearing such business in
the the future; provided, however, that the aggregate number of shares of the
Common Stock to be delivered hereby shall not exceed 468,750. For purposes of
this Section 2.9, "Customers" shall mean all customers of Buyer whose trades are
cleared through SLK, including OSTLLC and its members and those customers listed
on Schedule
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2.9 cleared through ▇▇▇▇▇▇, including, without limitation, the Customers
represented by the Customer Accounts and customers introduced to the Buyer after
the date hereof.
Not later than five days after the end of each month, Buyer shall deliver
to ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ a calculation of the Revenues for such month which shall
include the names of all customers who have made trades and reasonable details
with respect to such trades.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
AND MANAGEMENT AND STOCKHOLDERS
In order to induce Buyer to enter into this Agreement and to complete the
transactions contemplated hereby, Seller warrants, represents, covenants and
agrees with Buyer as follows:
3.1 Organization and Good Standing.
(1) Seller is a Delaware corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, is qualified to do
business as a foreign corporation in every other state in which it operates to
the extent required by the laws of such states except where the failure would
not be material, and has full corporate power and authority to carry on its
business as now conducted and to own and operate its assets, properties and
business. The copies of the Certificate of Incorporation, and of all amendments
thereof, and of the By-laws, as amended to date, of Seller delivered to Buyer
and are true and complete as of the date of delivery.
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(2) OSTLLC is a New York limited liability company duly organized,
validly existing and in good standing under the laws of the State of New York,
is qualified to do business as a foreign limited liability company in every
other state in which it operates to the extent required by the laws of such
states, except where the failure would not be material, and has full limited
liability company power and authority to carry on its business as now conducted
and to own and operate its assets, properties and business. The copies of the
Articles of Organization and of all amendments thereof, and of the operating
agreement, as amended to date, of OSTLLC delivered to Buyer are true and
complete as of the date of delivery
3.2 Authority and Validity. The execution, delivery and performance of this
Agreement by Seller and the consummation of the transactions contemplated hereby
have been duly and validly authorized by all necessary action on the part of
Seller. This Agreement has been duly and validly executed and delivered by the
Seller, and is the valid and binding obligation of Seller, enforceable in
accordance with its terms. Neither the execution, delivery or performance of
this Agreement by Seller, nor the consummation by Seller of the transactions
contemplated hereby, nor compliance by Seller with any of the provisions hereof
will, to the best knowledge of the Seller, (a) cause a material default (or give
rise to any right to termination, cancellation or acceleration) under any of the
terms, conditions, or provisions of any material agreement, instrument or
obligation to which Seller is a party, or by which Seller or any of its
respective assets are or may be bound, except where requisite consent has been
obtained, or (b) materially violate any law, statute, rule, regulation or
judgment, order, writ, injunction, or decree of any court, administrative agency
or governmental body, in each case applicable to Seller, or any of its
respective assets, and (c) except as to the National Association of Securities
Dealers, Inc. ("NASD") and the Philadelphia Stock Exchange ("PhilEx"), no filing
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with, and no permit, authorization, consent or approval of, any person
(governmental or private) is necessary or required for the consummation by
Seller of the transactions contemplated by this Agreement. Seller shall deliver
to Buyer the appropriate Secretary's certification as to the foregoing and a
shareholder's written consent to this Agreement and the performance thereof
commencing herewith.
3.3 Registration as a Broker-Dealer. OSTLLC is currently a broker-dealer
firm registered with (i) the SEC, (ii) the PhilEx, (iii) the States of New York,
New Jersey, Connecticut, Pennsylvania, Ohio, Illinois, Florida, North Carolina,
Texas, Alabama, Maryland and Massachusetts. OSTLLC has all permits, licenses and
authorizations required by any government authority or agency and any securities
self-regulatory organization for the conduct of its securities business other
than permits, licenses and authorizations which are not material. OSTLLC is
registered and in good standing with the SEC as a broker-dealer pursuant to the
Exchange Act and in each jurisdiction which requires such registration or
qualification in connection with its business and is a member in good standing
of the PhilEx, and is currently fully registered to conduct business in New
York, and has materially complied with such regulatory bodies and any other
industry, governmental, or trade organization required by law for the conduct of
its present business, except where the failure to be so registered or qualified
will not have a materially adverse effect on the business of OSTLLC.
3.4 Accuracy of Filings. Except as set forth in Schedule 3.4, all
documents, statements or instruments filed by OSTLLC with the SEC and PhilEx, or
any state agency were timely filed and OSTLLC has not received any notice of a
material current deficiency or past material deficiency which has not been
cured, except for those listed on Schedule 3.4, and except where the failure to
make such timely filing would not have a materially adverse effect on the
business of OSTLLC. All
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of such filings, whether or not required, were, to the best knowledge of the
Seller, materially true and accurate as of the date of submission. OSTLLC is in
material compliance with any and all material rules, regulations, and
requirements of the SEC and PhilEx applicable to its operations.
3.5 Compliance; Governmental Authorization. To the best knowledge of
Seller, OSTLLC has complied and is in compliance in all material respects with
all material federal and state laws, ordinances, regulations, and orders
applicable to OSTLLC's business and assets, and is not presently engaged in any
activity, or omitting to take any action, which could reasonably be deemed a
violation of any of the foregoing and which would affect the Seller's power to
enter into this Agreement or sell the Assets as set forth herein. To the
knowledge of Seller, there are no material federal, state or local governmental
licenses, registrations or permits necessary for conducting the business of
OSTLLC, other than a license to conduct a securities brokerage business
("Broker-Dealer License"), which Broker-Dealer License is in full force and
effect and as to which is no material proceeding pending or threatened in
writing to revoke or limit any thereof.
3.6 Full Disclosure. To the best knowledge of the Seller, (a) neither this
Agreement, nor any other document, certificate or statement furnished to the
Buyer by or on behalf of Seller in connection with the transactions contemplated
hereby contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained herein and
therein not misleading, and (b) there is no fact which materially adversely
affects the assignability or transferability of the Assets which has not been
set forth in this Agreement.
3.7 Litigation. To the knowledge of Seller, there is no material action,
suit, or proceeding pending or threatened in writing against Seller, except
those listed and described on Schedule 3.7, and Seller is not a party or subject
to the provisions of any order, writ, injunction,
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judgment or decree of any court or government agency or instrumentality or any
arbitration award, that could adversely affect Seller's power and right to enter
into this Agreement or sell the Assets as set forth herein.
3.8 Enforceability of the Agreement. When duly executed and delivered by
all parties hereto, this Agreement will be legal, valid, and binding obligations
of the Seller, enforceable by Buyer according to its terms.
3.9 Financial Statements. The Seller and OSTLLC have previously delivered
or will deliver at Closing copies of the following financial statements and
financial data of the their respective entities, which are hereby incorporated
as an integral part of this Agreement:
(a) Annual certified audit submitted pursuant to SEC Rule 17a-5 for the
fiscal year ended December 31, 2000 (Seller only);
(b) FOCUS Reports, Part IIA, for the fiscal year ended December
31,2000;
(c) FOCUS Reports, Part IIA for the first two quarters of the 2001
fiscal year through June 30, 2001; and
(d) Trial balance for the months of July, August and September, 2001,
Seller represents and warrants that all of said financial statements are
materially true and correct.
3.10 Employment Relations. To the knowledge of Seller, OSTLLC is in
substantial compliance with all material federal, state or other applicable
domestic laws respecting employment and employment practices, and has not and is
not engaged in any unfair labor practice. To the knowledge of Seller, except as
set forth in Schedule 3.10, no unfair labor practice complaint against OSTLCC is
actually pending or threatened against or involving OSTLLC, no labor union
representation question exists respecting the employees of OSTLLC, no grievance
which might have an adverse effect
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upon OSTLLC or the conduct of its business exists, no arbitration proceeding
arising out of or under any collective bargaining agreement is pending and no
claim has been asserted arising out of or under any such agreement.
3.11 Employee Benefit Plans. Except as set forth on Schedule 3.11, there
are no employee benefit plans for employees of OSTLLC.
3.12 Environmental Laws and Regulations. To the knowledge of Seller, each
of Seller and OSTLLC is in compliance in all material respects with all
applicable federal, state and local laws and regulations relating to pollution
control and environmental contamination including, but not limited to, all laws
and regulations governing the generation, use, collection, discharge, or
disposal of hazardous materials and all laws and regulations with regard to
record keeping, notification and reporting respecting hazardous materials.
Neither has been alleged to be in violation of, or has been subject to any
administrative or judicial proceeding pursuant to such laws or regulations
either now or any time during the past three years. To the knowledge of Seller,
there are no facts or circumstances which either Seller or OSTLLC reasonably
expects could form the basis for the assertion of any claim against either
relating to environmental matters including, but not limited to, any claim
arising from past or present environmental practices, or any other federal,
state or local environmental statue, other than claims which are not likely to
have a material adverse effect on the business, results of operations, financial
condition or prospects of OSTLLC.
3.13 Books and Records. To the knowledge of Seller, except as set forth in
Schedule 3.13, the books and records of OSTLLC have been maintained on a basis
consistent with prior years and materially substantiate the amounts set forth on
the financial statements of OSTLLC delivered pursuant to Section 3.9.
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3.14 Title to the Assets. The Seller has and as of the Closing will have,
good and marketable title to the Assets, free and clear of all liens, judgments
and encumbrances of whatsoever nature other than Permitted Encumbrances.
3.15 Integrity of Assets. Seller is transferring all copies and versions in
its possession, in whatever format, of the names, addresses and related
information and data to the Customer Accounts to Buyer, and Seller will not
duplicate the names, addresses and related information and data on the computer
hardware or software for its own use or for sale to or use by any third party.
3.16 Contracts. Seller has delivered true, correct and complete copies of
the Assumed Contracts. To the knowledge of Seller, each of the Assumed Contracts
is in full force and effect and is a valid and binding obligation of Seller and
the other parties thereto, enforceable in accordance with its terms against
Seller and, to Seller's knowledge, each such other party, and all consents have
been or will be obtained if necessary to the assignment of the Assumed Contracts
to Buyer. To the knowledge of Seller, Seller is in material compliance with its
obligations thereunder and no default, event of default or event, which with
giving of notice or passage of time or both would constitute a default or event
of default, on the part of Seller has occurred and/or is now continuing other
than those that are not material. Seller is not aware of any loss or termination
or threatened loss or termination of any Assumed Contract.
3.17 Intangible Assets. To the knowledge of Seller, Seller or OSTLLC owns
or possesses the right to those Intangible Assets set forth on Schedule 1.2(5)
annexed hereto and made part hereof. To the knowledge of Seller, there are no
pending, or threatened claims or assertions to Seller's use of any of the
Intangible Assets and none of the Intangible Assets infringes on the rights of
any person
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or entity and neither Seller nor OSTLLC has knowledge of any material facts
which, with notice or the passage of time or both, could reasonably give rise to
any such claim or assertion.
3.18 Branch Offices. The branch offices of Seller have been restructured as
non-business branch locations, to the fullest extent that such transfer can be
accomplished without the affirmative approval of the NASD or PhilEx, or to the
extent that the NASD or PhilEx shall have granted approval if counsel to Buyer
shall have deemed the same necessary or desirable.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
To induce Seller to enter into this Agreement and consummate the
transactions contemplated hereby, Buyer represents and warrants to Seller as
follows:
4.1 Organization and Good Standing. Buyer is a Delaware corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, is qualified to do business as a foreign corporation in every other
state in which it operates to the extent required by the laws of such states,
and has full power and authority to carry on its business as now conducted and
to own and operate its assets, properties and business.
4.2 Authority and Validity. The execution, delivery and performance of this
Agreement by Buyer and the consummation of the transactions contemplated hereby
have been duly and validly authorized by all necessary action on the part of
Buyer. This Agreement has been duly and validly executed and delivered by Buyer,
and is the valid and binding obligation of Buyer, enforceable in accordance with
its terms. Neither the execution, delivery or performance of this Agreement by
Buyer, nor the consummation by Buyer of the transactions contemplated hereby,
nor compliance by
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Buyer with any of the provisions hereof will, to the best knowledge of Buyer,
(a) cause a default (or give rise to any right to termination, cancellation or
acceleration) under any of the terms, conditions, or provisions of any material
agreement, instrument or obligation to which Buyer is a party, or by which Buyer
or any of its respective assets are or may be bound, or (b) violate any law,
statute, rule, regulation or judgment, order, writ, injunction, or decree of any
court, administrative agency or governmental body, in each case applicable to
Buyer, or any of its respective assets, and except as to the NASD, no filing
with, and no permit, authorization, consent or approval of, any person
(governmental or private) is necessary or required for the consummation by Buyer
of the transactions contemplated by this Agreement. Buyer shall deliver to
Seller the appropriate Secretary's certification as to the foregoing.
4.3 Registration as a Broker-Dealer. Buyer's wholly-owned subsidiary, ▇.▇.
▇▇▇▇▇▇, Inc. ("ABWI") is currently a broker-dealer firm registered with (i) the
SEC, (ii) the NASD (iii) all the fifty States, the District of Columbia and (iv)
SIPC. ABWI has all permits, licenses and authorizations required by any
government authority or agency and any securities self-regulatory organization
for the conduct of its securities business. ABWI is registered and in good
standing with the SEC as a broker-dealer pursuant to the Exchange Act and in
each jurisdiction which requires such registration or qualification in
connection with its business and is a member in good standing of the NASD and
SIPC, and is currently fully registered to conduct business in New York, and has
fully complied with such regulatory bodies and any other industry, governmental,
or trade organization required by law for the conduct of its present business.
4.4 Accuracy of Filings. All documents, statements or instruments required
to be filed by Buyer or ABWI with the SEC, NASD, SIPC or any state agency were
timely filed and neither the
18
Buyer nor ABWI has received any notice of a current deficiency or past
deficiency not cured, except for those listed on Schedule 4.4 annexed hereto and
made part hereof. All of such filings, whether or not required, were, to the
best knowledge of the Buyer, true and accurate as of the date of this
submission. ABWI is in full compliance with any and all rules, regulations, and
requirements of the SEC, NASD, and SIPC.
4.5 Compliance; Governmental Authorization. To the best knowledge of the
Buyer, Buyer has complied and is in compliance with all material respects with
all federal, state, local and foreign laws, ordinances, regulations, and orders
applicable to the Buyer's business and assets. There are no federal, state,
local or foreign governmental licenses, registrations or permits necessary for
conducting the business of the Buyer, and ABWI, other than ABWI's licenses to
conduct a securities brokerage business ("Broker-Dealer Licenses"), which are in
full force and effect and against which there are and have been no violations
and no proceeding pending or threatened to revoke or limit any thereof, and all
periodic and other reports and filings required to be made in connection with
the Broker-Dealer Licenses and all payments with respect thereto have been made
and paid in a timely fashion.
4.6 Full Disclosure. To the best knowledge of the Buyer, neither this
Agreement, nor any other document, certificate or statement furnished to the
Seller or OSTLLC by or on behalf of the Buyer in connection with the
transactions contemplated hereby contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the statements
contained herein and therein not misleading which has not been set forth in this
Agreement.
4.7 Litigation. There is no action, suit, proceeding or investigation
pending or threatened against the Buyer for more than $50,000.00, except those
listed and described on
19
Schedule 4.7 annexed hereto and made part hereof, and Buyer is not a party or
subject to the provisions of any order, writ, injunction, judgment or decree of
any court or government agency or instrumentality or any arbitration award, that
could adversely affect Buyer's power and right to enter into this Agreement.
4.8 No Violation of Law. The Buyer is not engaging in any activity or
omitting to take any action as a result of which (a) it is in violation of any
rule, law, regulation, zoning or other ordinance, statute, order, injunction, or
decree, or any other requirement of any court or governmental or administrative
body or agency, applicable to the Buyer, the effect of which would affect the
Buyer's power to enter into this Agreement.
4.9 Enforceability of the Agreement. When duly executed and delivered by
all parties hereto, this Agreement is a legal, valid and binding obligation of
the Buyer, enforceable by Seller according to its terms.
4.10 Financial Statements. The Buyer and ABWI have previously delivered
copies of the following financial statements and financial data of their
respective entities, which are hereby incorporated as an integral part of this
Agreement:
(a) Annual certified audit of ABWI submitted pursuant to SEC Rule 17a-5
for the fiscal year ended December 31, 2000;
(b) FOCUS Reports, Part IIA, of ABWI for the fiscal year ended December
31, 2000;
(c) FOCUS Reports, Part IIA of ABWI for the first two quarters of the
2001 fiscal year through June 30, 2001;
(d) Trial balance of ABWI for the months of July, August and September,
2001;
20
(e) Federal, state and local income tax returns of Buyer for fiscal
year ended December 31, 2000;
(f) Annual Report on Form 10KSB of Buyer for the fiscal year ended
September30, 2000;
(g) Quarterly financial statements of Buyer on Form 10Q for the fiscal
quarters ended December 31, 2000, March 31, 2001 and June 30, 2001;
(h) Trial balance of Buyer for the months of July, August and September
2001. All of said financial statements, data and tax returns are true and
correct, and have been prepared in accordance with all applicable rules and
regulations applied on a consistent basis through the periods involved. Except
for changes in the ordinary course of business, there have been no material
changes since the latest date thereof.
4.11 Employment Relations. Buyer and ABWI are in substantial compliance
with all federal, state or other applicable laws, domestic or foreign,
respecting employment and employment practices, and have not and are not engaged
in any unfair labor practice. No unfair labor practice complaint against Buyer
or ABWI is actually pending or threatened against or involving Buyer or ABWI, no
representation question exists respecting the employees of Buyer or ABWI, no
grievance which might have an adverse effect upon Buyer or ABWI or the conduct
of its business exists, no arbitration proceeding arising out of or under any
collective bargaining agreement is pending and no claim has been asserted
arising out of or under any such agreement.
4.12 Securities Law Disclosures. Buyer has filed all forms, reports,
statements, or other documents required to be filed by Buyer with the Securities
and Exchange Commission ("SEC") and NASDAQ. As of the respective filing dates,
the Buyer has complied in all material respects with the
21
requirements of the Exchange Act or the Securities Act, as applicable. The
Buyer's reports did not at the time they were filed contain any untrue statement
of material fact, or omit to state a material fact required to be stated therein
that was necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading.
4.13 Issuance of Common Stock
The Common Stock has been duly authorized and validly issued and represents
fully paid and non-assessable shares of the common stock of Buyer.
ARTICLE V
NON-SOLICITATION AND CONFIDENTIALITY
5.1 Non-Competition and Non-Solicitation.
(1) Seller and Messrs. ▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ each severally
covenant and agree that for a period of three (3) years from the date of this
Agreement, they will not directly or indirectly, through Seller's officers,
directors, shareholders, employees or agents, or otherwise, or in any capacity,
either individually or as a member of any firm, or as a partner, financier,
officer, director, stockholder, employee, agent or consultant of any business,
compete or attempt to compete with the Buyer's business by soliciting any
Customer Accounts or by inducing or attempting to induce a termination of any
Branch Office Agreements being acquired by Buyer hereunder, or by soliciting any
persons trading securities under the jurisdiction of OSTLLC.
(2) Seller and Messrs. ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ Jahre
(collectively, the "Parties") each severally covenant and agree that for a
period of three (3) years from the date of this Agreement, each will not
directly or indirectly, through Seller's officers,
22
directors, shareholders, employees, representatives, traders or agents, or
otherwise, or in any capacity, either individually or as a member of any firm,
or as a partner, financier, officer, director, stockholder, employee, agent or
consultant of any business, induce, solicit, offer or recruit or attempt to
induce, solicit, offer or recruit any officer, manager, registered
representative or other significant employee or agent of the Buyer or OSTLLC to
leave the service or employ of the Buyer or OSTLLC or employ or use the services
of such personnel for any purpose.
(3) Passive ownership of 5% or less of the issued and outstanding stock
of a publicly traded company shall not be deemed a violation of this Section
5.1.
5.2 Confidentiality.
(1) The Parties acknowledge that they may possess proprietary and
confidential information being purchased hereunder pursuant to the terms and
conditions of this Agreement by Buyer, including but not limited to all of the
following materials and information (whether or not reduced to writing and
whether or not subject to copyright) to which they may have had access or may
have developed, in whole or in part:
(i) marketing techniques, pricing policies, sales and other
financial information, customer names with information and data, accounting
procedures, employee records and personnel history, tax records, and all
other materials or information relating to the manner in which the Seller
conducted its business relating to the Customer Accounts;
(ii) application, operation system, communication and other computer
hardware and software to the extent proprietary to Seller, including
without limitation, names, addresses and other information and data of
individuals on computer data bases and software, and any other related
documentation and manual in each case relating to the
23
Customer Accounts; and
(iii) any other materials or information related to the business or
activities of the Seller relating to the Customer Accounts which are not
generally known to others engaged in similar businesses or activities.
(All of the above, to the extent that and insofar as it is not publicly
disclosed in violation of this Agreement, is hereinafter referred to as the
"Proprietary and Confidential Information".)
(2) The Parties acknowledge the confidential and proprietary nature of
the Proprietary and Confidential Information and that improper use, disclosure
or divulgence to third parties of such Proprietary and Confidential Information
could result in damages to, or otherwise adversely affect the business or
affairs of the Buyer.
(3) The Parties shall keep the Proprietary and Confidential Information
confidential and shall not directly or indirectly, without the prior written
consent of the Buyer, disclose or divulge to any third party any of such
Proprietary and Confidential Information. The obligation to keep the Proprietary
and Confidential Information confidential shall be continuing and ongoing.
5.2 Exclusions. For purposes hereof, Proprietary and Confidential
Information shall not include any information that is or becomes generally
available to the public other than as a result of an unauthorized disclosure by
a Party. The foregoing restriction shall not be applicable to disclosure of any
Proprietary and Confidential Information pursuant to law or legal process.
5.3 Interpretation and Remedies.
(i) The restrictions set forth in this Section are considered by the
Parties to be reasonable and necessary for the purpose of protecting the value
of the Assets that
24
are being purchased hereunder. Each individual Party acknowledges that
compliance by him with the restrictions set forth in this Section will not
prevent him from earning a livelihood. It is, therefore, the desire and intent
of the Parties that the provisions of this Agreement shall be enforced to the
fullest extent permissible under the laws and public policies applied to each
jurisdiction in which enforcement is sought. If any particular provision or
portion of this Agreement shall be adjudicated to be invalid or unenforceable,
this Agreement shall be deemed amended to narrow the scope of such provisions
(including time duration or geographical scope) to the extent necessary to make
it valid and enforceable, or if such narrowing is not possible to delete
therefrom such provision or portion adjudicated to be invalid or unenforceable,
such amendment to apply only with respect to the operation of this Agreement in
the particular jurisdiction in which such adjudication is made.
(2) If there is a breach or threatened breach of the provisions of this
Section, each Party and Seller acknowledge that the Buyer's business would be
irreparably harmed and that a remedy at law would not be adequate and,
therefore, each Party and Seller agree that the Buyer shall be entitled to an
injunction restraining the Seller and the Parties, or any one of them, from such
breach and other equitable relief to secure the enforcement of this Agreement,
and that the Buyer shall be entitled to receive reimbursement from the breaching
party for all costs and expenses, including reasonable attorney's fees, incurred
in enforcing this Agreement. Nothing contained herein shall be construed as
prohibiting the Buyer from pursuing any other remedies for such breach or
threatened breach.
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ARTICLE VI
REMEDIES
6.1 Survival of Representations and Warranties. The right of a party to
maintain any proceeding or action against another party hereto based on a breach
of a representation and warranty or default of a covenant in this Agreement or
pursuant hereto made by any party shall survive for a period of one (1) year
from the date hereof, or in the event of fraud for a period of one (1) year from
the date of the discovery of the fraud.
6.2 Indemnification.
(1) Indemnification by Seller. Subject to Section 6.4, Seller covenants
and agrees to defend, to indemnify and hold harmless Buyer and its affiliates,
officers, directors, shareholders, successors, and assigns (collectively, the
"Buyer Indemnified Persons"), and each of them, from and against, any actual
damages, losses, obligations, liabilities, claims, or expenses (including all
reasonable attorneys' fees) incurred or paid by the Buyer arising out of or
based upon (i) the failure of the Seller to perform and comply with any of the
respective covenants, agreements or obligations arising under this Agreement, or
(ii) the material inaccuracy of any representation or warranty made to Buyer
pursuant to the terms of this Agreement, or (iii) claims made by any creditor
against the Seller on or after the Closing which arose or relate to any period
prior to and including the date hereof, whether absolute, accrued, contingent or
otherwise and whether contractual, tax or other type of liability, other than
with respect to the Assumed Liabilities.
(2) Indemnification by Buyer. Buyer covenants and agrees to defend, to
indemnify and hold harmless the Seller and OSTLLC and their respective
affiliates, officers, directors, shareholders, members, successors, and assigns
(collectively, the "Seller Indemnified
26
Persons" and with the Buyer Indemnified Persons, the "Indemnified Persons"), and
each of them, from and against, any actual damages, losses, obligations,
liabilities, claims, or expenses (including all reasonable attorneys' fees)
incurred or paid by the Seller or OSTLLC arising out of or based upon (i) the
failure of the Buyer to perform and comply with any of its respective covenants,
agreements or obligations arising under this Agreement or; (ii) the inaccuracy
of any material representation or warranty made to Seller pursuant to the terms
of this Agreement; or (iii) the failure of Buyer to perform or discharge any of
the Assumed Liabilities; provided, however, that the maximum amount that Buyer
shall be required to indemnify hereunder shall not exceed the aggregate fair
market value of the Common Stock as of the date of Closing .
6.3 Claims for Indemnification. A party seeking indemnification (the
"Indemnified Party") shall first notify the party from whom indemnification is
sought (the "Indemnifying Party") in writing of any event, or of any facts,
which, in its opinion, entitle or may entitle the Indemnified Party to
indemnification under this Article VI. The notice from the Indemnified Party
shall specify all facts then known to it relating to its claim for
indemnification and the amount or estimated amount of the liability arising
therefrom. The right of the Indemnified Party to indemnification and the amount
or the estimated amount thereof, as set forth in the notice, shall be deemed
agreed to by the Indemnifying Party unless, within 30 days after the receipt of
such notice, the Indemnifying Party notifies the Indemnified Party in writing
that it disputes the right of the Indemnified Party to indemnification as set
forth or estimated in the notice or that the Indemnifying Party elects to
defend, in the manner provided in Section 6.4 hereof, the claim giving rise to
such indemnification right. If the Indemnified Party shall be duly notified that
the Indemnifying Party disputes such claim as aforesaid, the parties shall
endeavor to settle and compromise such dispute but no such settlement or
27
compromise shall be effected without the consent of both. If unable to do any of
the foregoing, such dispute as to indemnification shall be determined by
appropriate litigation (which shall mean when the claim has been finally
determined by a court or tribunal from which determination no appeal is or may
be taken or when the defense thereto has been abandoned); and any right of an
Indemnified Party to indemnification established by reason of such settlement,
compromise, or litigation shall be promptly thereafter paid and satisfied by the
Indemnifying Party.
6.4 Right to Defend; Matters Relating to Indemnification
(1) If the facts giving rise to indemnification shall involve any
actual or threatened claim or demand by any third party against an Indemnified
Party, the Indemnifying Party shall have the right, at the expense of the
Indemnifying Party through counsel of the Indemnifying Party's choosing, to
defend or prosecute such claim or demand in the name of the Indemnified Party,
as the case may be (without prejudice to the right of the Indemnified Party to
participate through counsel of its own choosing at its own expense). The
Indemnified Party shall cooperate in the defense or prosecution of said claim or
demand, including providing the Indemnifying Party with access to such books and
records of the Indemnified Party in the possession of the Indemnified Party,
which shall be reasonably deemed by the Indemnifying Party to relate to said
claim or demand, and shall be entitled to be reimbursed, as provided in Sections
6.2(1) or 6.2(2), for all reasonable costs and expenses incurred by it in
connection therewith. No settlement shall be effected by an Indemnifying Party
without the consent of the Indemnified Party but such consent shall not be
unreasonably withheld.
(2) No party hereto shall be required to indemnify, defend or hold
harmless any Indemnified Party with respect to any claim or loss until the
aggregate loss of such Indemnified Party
28
shall exceed $100,000, and then only to the extent of such excess.
(3) Any losses of a party claiming indemnity hereunder shall be net of
(i) any insurance payable to such party in connection with the facts giving rise
to the right of indemnification and (ii) any actual reduction in income taxes
payable by such Indemnified Party.
6.5 (1) The sole remedy of Buyer and any of the Buyer Indemnified Parties
for any claim under Agreement, including any claim for payment of indemnity
provided for hereunder, shall be satisfied by recourse to the shares represented
by the Escrow Shares. In the event any of Buyer or the Buyer Indemnified Parties
shall, as a result of any award of damages, be entitled to a liquidated sum,
such sum shall be satisfied by the transfer to Buyer or to such Indemnified
Party by the Escrow Agent of such number of shares of the Escrow Shares (valued
pursuant to the following sentence) as shall be equal to the amount of such
liquidated amount. For purposes hereof, the Escrow Shares shall be valued at the
higher of the fair market value of such shares on the date that such amount of
indemnification becomes payable or $2.90 per share. The fair market value of
such Escrow Shares shall be equal to the last reported sale price of the shares
of the Common Stock of Buyer on the exchange where it is primarily traded or, if
not traded on an exchange, the last reported sale price of such stock on the
NASDAQ national market system or Small Cap market.
(2) In the event of litigation to enforce this Agreement, the
prevailing party, in addition to any other relief such party may be awarded,
shall be entitled to recover its reasonable attorneys' fees, including those
incurred with respect to any appellate proceeding. Except as herein express
provided, all remedies provided in this Agreement shall be cumulative and shall
not preclude assertion by any party hereto of any other right or seeking of any
other remedies against any other party hereto, provided that the total liability
of the Seller shall be as provided in subparagraph (1) of this
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Section 6.5.
ARTICLE VII
ESCROW AGENT
The escrow agent shall be Singer Frumento, LLP (the "Escrow Agent") and the
escrow of the Escrow Certificate and the Deferred Payment Certificate (the
"Escrow Shares") shall be subject to the following provisions:
7.1 Duties and Authorization. The delivery of the Escrow Shares to the
Escrow Agent is for the accommodation of the parties. The duties of the Escrow
Agent shall be determined solely by the express provisions of this Agreement. In
the event Escrow Agent receives a written demand from either Seller or Buyer for
any portion of the Escrow Shares (which demand shall include sufficient facts to
show that said party is entitled to receive such consideration pursuant to the
terms of this Agreement), Escrow Agent shall give ten (10) days written notice
to the other party of such demand and of Escrow Agent's intention to remit such
consideration to the party making the demand on the stated date. If Escrow Agent
does not receive objection within ten (10) days after receipt of such notice,
Escrow Agent is hereby authorized to so remit. If however, Escrow Agent actually
receives written objection from the other party within ten (10) days after
receipt of notice, Escrow Agent shall continue to hold the Escrow Shares until
otherwise directed by joint written instructions from Seller and Buyer, or until
a final judgment of an appropriate court is issued. The parties authorize the
Escrow Agent, without creating any obligation on the part of the Escrow Agent,
in the event this Agreement or the Escrow Shares become involved in litigation,
to deposit any certificates evidencing the Escrow Shares, or any portion
thereof, with stock powers attached duly endorsed in
30
blank, with the clerk of the court in which the litigation is pending and
thereupon the Escrow Agent shall be fully relieved and discharged of any
responsibility under this Agreement. The undersigned also authorizes the Escrow
Agent, if it is threatened with litigation, to interplead all interested parties
in any court of competent jurisdiction and to deposit any certificates
evidencing the Escrow Shares, or any portion thereof, with stock powers attached
duly endorsed in blank, with the clerk of the court and thereupon the Escrow
Agent shall be fully relieved and discharged of any further responsibility
hereunder. Seller acknowledges that the Escrow Agent is also serving as Buyer's
Attorney and Seller hereby consents to Escrow Agent representing Buyer in the
Closing of this Agreement and in any dispute that may arise between Buyer and
Seller.
7.2 Liability. The Escrow Agent shall not be liable for any mistake of fact
or error of judgment or any acts or omissions of any kind unless caused by its
willful misconduct or gross negligence. The Escrow Agent shall be entitled to
rely on any instrument or signature believed by it to be genuine and may assume
that any person purporting to give any writing, notice or instruction in
connection with this Agreement is duly authorized to do so by the party on whose
behalf such writing, notice or instruction is given.
7.3 Indemnification. The parties will, and hereby agree to jointly and
severally indemnify the Escrow Agent for and hold it harmless against any loss,
liability, or expense incurred without gross negligence or willful misconduct on
the part of the Escrow Agent arising out of or in connection with the acceptance
of, or the performance of its duties under, this Agreement, as well as the costs
and expenses of defending against any claim or liability arising under this
Agreement.
7.4 Delivery of the Escrow Certificate. Upon the first anniversary of the
date hereof, the Escrow Agent shall deliver to Seller the entire balance of the
Escrow Shares represented by the
31
Escrow Certificate held by it, unless there shall then be any outstanding claim
by Buyer for damages due to breach of this Agreement or for indemnity by a Buyer
Indemnified Person, in which case the Escrow Agent shall continue to hold the
Escrow Certificate pending the resolution of such claim.
ARTICLE VIII
DOCUMENTS TO BE DELIVERED AT AND AFTER CLOSING
8.1 The sale, conveyance, assignment, transfer and delivery of the Assets
shall be effected by delivery concurrently herewith of the following documents
(the "Closing Documents"):
(1) Secretary's Certificates as referred to in Sections 3.2 and 4.2 of
this Agreement;
(2) ▇▇▇▇ of Sale in the form annexed hereto as Exhibit 8.1(2);
(3) The delivery by the Buyer to the Seller of the shares represented
by the Closing Certificate and to the Escrow Agent of the shares
represented by the Deferred Payment Certificate and the Escrow Certificate;
(4) The delivery by the Buyer of such instruments of assumption as are
reasonably requested by the Seller to evidence Buyer's assumption of the
Assumed Liabilities and the Seller's release from CIT;
(5) With respect to any offices listed on Schedule 1.2(2) as to which
Branch Management Agreements are still in effect as of the date hereof,
Assignment and Assumption of Branch Management Agreements, or Amendments to
the Branch Management Agreements substituting ▇.▇. ▇▇▇▇▇▇, Inc. or its
designees in the place and stead of Seller, in the form annexed hereto as
Exhibit 8.2(5);
32
(6) The delivery to the Buyer at the current premises of Seller all
books and records of (including all computerized records and other
computerized storage media and the software used in connection therewith)
OSTLLC and those relating to the other Assets being acquired hereunder from
Seller, including, without limitation, all records relating to the Customer
Accounts.
(7) Assignment and Assumption of Seller's interests in OSTLLC and of
Contracts referred to in Sections 1.2(3) and 1.2(4) of this Agreement in
the forms annexed hereto as Exhibit 8.1(7).
(8) Assignments of the Intellectual Assets in the form of Exhibit
8.1(8) as referred to in Section 1.2(5);
(9) Such other documents, certificates and other documents as counsel
for either party may have reasonably requested.
8.2 The sale, conveyance, assignment, transfer and delivery of the Assets,
if not completed by the date hereof, shall be effected by delivery within
forty-five (45) days following the date hereof.
ARTICLE IX
CERTAIN ADDITIONAL AGREEMENTS
9.1 Transfer of Customer Accounts.
(1) Immediately upon the execution of this Agreement, the parties shall
use their best efforts to establish a clearing agreement with Spear Leeds
▇▇▇▇▇▇▇, Inc. ("SLK") with Buyer as introducing broker. The parties shall also
use their best efforts to obtain SLK's consent and/or cooperation to transfer
the Customer Accounts from Seller to Buyer by means of a "Tape-
33
to-Tape" procedure for electronic transfer in bulk as of a certain date.
(2) As soon as practical after such a clearing agreement has been
entered into, and subject to any approvals deemed required pursuant to Article
VI hereof, Seller shall communicate with all customers under Customer Accounts
and inform them of the need to transfer their account out of Seller, and
advising them, by such written communication as shall be approved by Buyer and
Seller, to transfer their accounts to Buyer. Seller shall provide all such
customers with all forms and information necessary to facilitate such a
transfer, including ACAT forms. Subject to SLK's approval, Seller shall also
provide appropriate notice indicating that an electronic transfer is to take
place.
(3) Upon receipt of any such forms from such customers (and absent any
material deficiencies as provided for by applicable securities industry rules
and regulation), Seller shall immediately (a) validate the transfer instruction
and return the transfer instruction to Buyer with an appropriate attachment
indicating all securities positions, any safekeeping positions, and any money
balance in the account as shown on the books of the carrying member, and (b)
give such instructions as may be necessary to SLK to complete the transfer,
provided that, in consultation with Buyer, Seller may delay transfer
instructions so that Customer Accounts may be aggregated to facilitate
electronic transfer in bulk.
9.2 Employment of ▇▇▇▇ ▇▇▇▇▇▇▇. Buyer and ▇▇▇▇ ▇▇▇▇▇▇▇ shall, at Closing,
enter into an Employment Agreement.
9.3 Mail Received After Closing. Seller agrees to deliver or cause to be
delivered to Buyer all correspondence addressed to Seller relating to the Assets
being acquired hereunder; and Buyer may open all mail addressed to Seller and
received by Buyer and, to the extent that such mail
34
and the contents thereof relate to Assets being acquired hereunder, deal with
the contents thereof. Buyer shall promptly deliver to the Seller all other mail
addressed to the Seller and received by Buyer.
9.4 Resignations. ▇▇▇▇ ▇▇▇▇▇▇▇ will deliver to Buyer his resignation of his
management position with OSTLLC.
ARTICLE X
MISCELLANEOUS
10.1 Closing. The "Closing" shall be concurrently herewith at the offices
of the Escrow Agent, or at such other date, time and place as the parties hereto
shall mutually agree.
10.2. Knowledge of Seller. For purposes of this Agreement "knowledge of the
Seller" shall mean the actual knowledge of any of its executive officers or
other persons with executive responsibilities.
10.2 Further Assurances. Each party hereto shall, from time to time after
the Closing, at the request of any other party hereto and without further
consideration, execute and deliver such other instruments of conveyance,
assignments, transfer and assumption, and take such other actions as such other
party may reasonably request to more effectively consummate the transactions
contemplated by this Agreement.
10.3 Reformation and Severability. If any provision of this Agreement is
held to be illegal, invalid or unenforceable under present or future laws
effective during the term hereof:
(1) in lieu of such illegal, invalid or unenforceable provision, there
shall be added automatically as a part of this Agreement a provision as
similar in terms to such illegal,
35
invalid or unenforceable provision as may be possible and be legal, valid
and enforceable; and
(2) the legality, validity and enforceability of the remaining
provisions hereof shall not in any way be affected or impaired thereby.
10.4 Entire Agreement; Modification. This Agreement, the Closing Documents
and the Schedules hereto set forth the entire understanding of the parties with
respect to the subject matter hereof, supersede all existing agreements and
understandings between them (and all prior representations and warranties)
concerning such subject matter and may be modified only by a written instrument
duly executed by each party hereto.
10.5 Notices. Any notice given pursuant to this Agreement to any party
hereto shall be deemed to have been duly given (i) on the third business day
after mailing if mailed by registered or certified mail, return receipt
requested, (ii) when telecopied, provided a copy of the notice is mailed by
registered or certified mail, return receipt requested, within one business day
following the date of the telecopied transmission, or (iii) when hand delivered
to the party to whom it is to be given at the address of such party set forth
below, as follows:
If to the Seller, at the address set forth in the first paragraph of
this Agreement:
with a copy to: ▇▇▇▇▇▇▇▇ Brog Leinwand ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ P.C.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Buyer: ▇.▇. ▇▇▇▇▇▇, Inc.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇,
Executive Vice Pres. & Chief Executive Officer
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Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Singer Frumento, LLP
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
or at such other address as a party shall from time to time designate by written
notice, in the manner provided herein, to the other parties hereto.
10.6 Waiver. Any waiver must be in writing, and any waiver by any party of
a breach of any provision of this Agreement shall not operate as or be construed
to be a waiver of any other breach of that provision or of any breach of any
other provision of this Agreement or as a waiver by any other party to this
Agreement. The failure of a party to insist upon strict adherence to any term of
this Agreement on one or more occasions will not be considered a waiver or
deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement.
10.7 Binding Effect; Assignment. The provisions of this Agreement shall be
binding upon and inure to the benefit of Seller, the parties signing below with
respect to Section 5 and the Buyer and their respective heirs, representatives,
successors and permitted assigns. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any party hereto without
the prior written consent of the other parties, and any purported assignment
without such consent shall be void, except that the Buyer may assign this
Agreement to any corporation in which it owns 100% of the outstanding shares of
voting stock and agrees to be bound by the provisions of the Agreement, provided
that Buyer guarantees the obligations of the assignee and provided further that
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Seller shall still receive the Common Stock of Buyer (and not of assignee) and
except that the Common Stock may be assigned to the Permitted Transferees.
10.8 No Third-Party Beneficiaries. Except for rights of Indemnified Parties
under Article VI hereof, this Agreement does not create, and shall not be
construed as creating, any rights enforceable by any person not a party to this
Agreement except for the Permitted Transferees.
10.9 Headings. The headings in this Agreement are solely for convenience of
reference and shall be given no effect in the construction or interpretation of
this Agreement.
10.10 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
10.11 Governing Law. This Agreement and all amendments thereof shall be
governed by, and construed in accordance with, the internal laws of the State of
New York applicable to contracts made and to be performed entirely within the
state, without giving effect to the principles of conflict of laws which may be
applied thereby. Buyer, Seller and Stockholders agree to submit to personal
jurisdiction and to waive any objection as to venue in the County of New York,
State of New York.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the date first written above.
▇.▇. ▇▇▇▇▇▇ GROUP, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇ CEO
--------------------
Title
ON-SITE TRADING, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
----------------
Title
INDIVIDUALS
(With respect to Section 5 only):
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ Jahre
-------------------------------------
▇▇▇▇▇▇ JAHRE