EQUITY EXCHANGE AND CONCILIATION AGREEMENT
THIS EQUITY EXCHANGE AND CONCILIATION AGREEMENT (the "Agreement")
is made as of March 3, 1999, by and among JWGenesis Financial Corp., a
Florida corporation (the "Company"), ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ("Leeds"), ▇▇▇▇
▇. ▇▇▇▇▇ ("Marks"), JWGenesis Capital Markets, LLC, a California
limited liability company ("JWGCM"), The Will ▇. ▇▇▇▇▇▇▇▇▇ Revocable
Trust (the "▇▇▇▇▇▇▇▇▇ Trust"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇▇"),
Will ▇. ▇▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇▇"), and the other members of the
▇▇▇▇▇▇▇▇▇ Group (as defined below) who appear as signatories to this
Agreement.
W I T N E S S E T H:
WHEREAS, the Company operates a full-service securities brokerage
and investment banking business through its subsidiaries and
affiliates that, on the date hereof, include JWGCM;
WHEREAS, JWGCM, as a subsidiary of the Company, is engaged in the
business of securities brokerage (including brokerage processing
services) and corporate finance and other capital markets transactions
and services;
WHEREAS, pursuant to the terms of that certain Amended and
Restated Agreement and Plan of Combination dated as of March 9, 1998
(the "Combination Agreement"), the Company (then known as ▇▇ ▇▇▇▇▇▇▇
Financial Services) and the other parties hereto consummated a series
of transactions whereby, among other things, the Company (i) acquired
all of the equity ownership interests of JWGCM (then known as Genesis
Merchant Group Securities, LLC) from the then owners of such interests
(the "JWGCM Equity Interests") in exchange for an aggregate of
1,500,000 shares of common stock, $.001 par value per share, of the
Company ("Common Stock") being issued to such former owners, (ii)
entered into an employment agreement with ▇▇▇▇▇▇▇▇▇ dated as of June
12, 1998 (the "▇▇▇▇▇▇▇▇▇ Employment Agreement") and with ▇▇▇▇▇▇▇▇▇
dated as of June 12, 1998 (the "▇▇▇▇▇▇▇▇▇ Employment Agreement"),
pursuant to which ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇ each became an officer and
director of the Company, and (iii) implemented other arrangements to
combine the previously separate businesses of the two enterprises (the
"Combination") and to integrate their operations; and
WHEREAS, following the Combination, significant differences of
opinion have arisen among several of the parties hereto with respect
to (i) the operation of the Company's business, (ii) the relative
rights and obligations of certain parties under the Combination
Agreement, the ▇▇▇▇▇▇▇▇▇ Employment Agreement, and the ▇▇▇▇▇▇▇▇▇
Employment Agreement, and (iii) other procedures or protocols of the
Company and JWGCM, with the result that the respective parties
involved have concluded that it is in their several and mutual best
interests (as well as the long term best interest of the public
shareholders of the Company) to provide for the separation of certain
aspects of JWGCM's operations from the Company and the discontinuation
of certain of their relationships with each other in order to achieve
a conciliation of their disputes and differences.
NOW, THEREFORE, for and in consideration of the premises and the
mutual agreements, representations and undertakings contained herein,
and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1
CERTAIN DEFINITIONS
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1.1 DEFINITIONS. For purposes of this Agreement, the following
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terms shall have the following meanings:
"CAPITAL STOCK" means, with respect to (a) any corporation, any
share, or any depository receipt or other certificate representing any
share, of an equity ownership interest in that corporation, and (b)
any other entity, any share, membership or other percentage interest,
unit of participation, or other equivalent (however designated) of an
equity interest in that entity.
"CHARTER DOCUMENTS" means, with respect to any entity at any
time, in each case as amended, modified, and supplemented at that
time, (a) the articles or certificate of formation, incorporation, or
organization (or the equivalent organizational documents) of that
entity, (b) the bylaws, operating agreement, trust indenture, or
regulations (or the equivalent governing documents) of that entity,
and (c) each document setting forth the designation, amount and
relative rights, limitations, and preferences of any class or series
of that entity's Capital Stock or of any rights in respect of that
entity's Capital Stock.
"CLOSING" shall mean and refer to the time when each of the
several events and matters contemplated by this Agreement shall be
deemed by ▇▇▇▇▇▇▇▇▇, for and on behalf of the ▇▇▇▇▇▇▇▇▇ Group, and the
Company to be consummated and effective with the effects provided for
herein, except for the contemplated delay in obtaining the regulatory
approvals required for the change of control of JWGCM that will be
effected by the exchange pursuant to Section 2.1. The parties
recognize and agree that this Agreement per se is effective as to each
signatory as of the date hereof with respect to representations made
and any agreement to perform an action (or refrain from an action) as
a condition or prerequisite for the Closing to occur as contemplated
and desired.
"CLOSING DATE" shall mean and refer to the date on which the
Closing is deemed to occur, which the parties agree shall be March 3,
1999, unless ▇▇▇▇▇▇▇▇▇ and the Company shall mutually agree to a later
date.
"CONFIDENTIAL INFORMATION" of any person shall mean and refer to
information relating to that person or its clients, customers, or
business that derives value from not being generally known to other
persons, including, but not limited to, internal business plans and
forecasts, marketing and growth strategies, technical or nontechnical
data, formulas (including criteria for weighing stock selection
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factors), patterns (including investment patterns), compilations
(including stock selection and buy lists), programs, devices, methods
(including stock selection and portfolio design and monitoring
methods), techniques, drawings, processes, financial data, or lists of
actual or potential clients, whether or not reduced to writing.
Confidential Information includes information disclosed to a person by
third parties that the person is obligated to maintain as
confidential. Confidential Information subject to this Agreement may
include information that is not a trade secret under applicable law,
but information that is not also a trade secret shall constitute
Confidential Information only for two years after the Closing Date.
Confidential Information does not include information known by the
Company with respect to JWGCM, or by JWGCM with respect to the
Company, prior to the date of the Combination Agreement.
"CORPORATE FINANCE ITEMS" shall mean and refer to all contracts,
agreements, or arrangements (whether or not written) relating to past,
current, or future performance (or referral for performance) by JWGCM
or its personnel of investment banking, corporate finance, or other
capital markets transactions or services (other than brokerage
services), and any and all fees, other compensation, reimbursements,
or other amounts that are or may be accrued, payable, or earnable with
respect to any such matters, whether now known or unknown. Corporate
Finance Items as of the date hereof include, but are not limited to,
the items identified in a special acknowledgment signed separately by
▇▇▇▇▇▇▇▇▇ and the Company.
"EMPLOYEE BENEFIT PLAN" has the meaning defined in Section 3(3)
of the Employment Retirement Income Security Act of 1974, as amended.
"ESCROW SHARES" shall mean and refer to the 150,000 shares of
Common Stock issued in the Combination to the former owners of JWGCM
that were placed and are being held in escrow pursuant to that certain
Escrow Agreement, with American Stock Transfer & Trust Company as
escrow agent (the "Escrow Agent"), dated June 12, 1998, among certain
of the parties to the Combination Agreement (the "Combination Escrow
Agreement").
"GOVERNMENTAL APPROVAL" means, at any time, any authorization,
consent, approval, permit, franchise, certificate, license,
implementing order, or exemption of, or registration or filing with,
any Governmental Authority, including any certification or licensing
of a natural person to engage in a profession or trade or a specific
regulated activity, at that time.
"GOVERNMENTAL AUTHORITY" means (a) any national, state, county,
municipal, or other government, domestic or foreign, or any agency,
board, bureau, commission, court, department, or other instrumentality
of any such government, and (b) any person having the authority under
any applicable Governmental Requirement to assess and collect taxes
for its own account.
"GOVERNMENTAL REQUIREMENT" means, at any time, (a) any law,
statute, code, ordinance, order, rule, regulation, judgment, decree,
injunction, writ, edict, award, authorization or other requirement of
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any Governmental Authority in effect at that time, and (b) any
obligation included in any certificate, certification, franchise,
permit, or license issued by any Governmental Authority or resulting
from binding arbitration, including any requirement under common law,
at that time.
"REGISTER," "REGISTERED," and "REGISTRATION" shall mean and refer
to a registration effected by preparing and filing a Registration
Statement or Statements in compliance with the Securities Act of 1933,
as amended (the "Securities Act") and applicable rules and regulations
thereunder, and the declaration or ordering of effectiveness of such
registration statement by the United States Securities and Exchange
Commission (the "Commission").
"REGISTRABLE SECURITIES" shall mean and refer to the shares of
Common Stock owned by the members of the ▇▇▇▇▇▇▇▇▇ Group and any
shares of Capital Stock issued or issuable, from time to time (with
any adjustments), on or in exchange for or otherwise with respect to
such Common Stock or any other Registrable Securities, until such time
that such shares (i) have been sold pursuant to a registration
provided for in Article 3 hereof or pursuant to Rule 144 under the
Securities Act, or (ii) may be sold pursuant to Rule 144 without
regards to the volume limitations thereof.
"REGISTRATION STATEMENT" shall mean and refer to, unless the
context shall require otherwise, the registration statement of the
Company under the Securities Act that covers the registration of the
Registrable Securities for resale by members of the ▇▇▇▇▇▇▇▇▇ Group.
"RETURNS" shall mean and refer to the returns, reports, or
statements (including any information returns) any Governmental
Requirement requires to be filed for purposes of any Tax.
"▇▇▇▇▇▇▇▇▇ GROUP" and "▇▇▇▇▇▇▇▇▇ GROUP MEMBERS" shall mean and
refer to ▇▇▇▇▇▇▇▇▇, the ▇▇▇▇▇▇▇▇▇ Trust, ▇▇▇▇▇▇▇▇▇, and the other
persons identified as such on the signature pages hereof, each of whom
is a former owner of JWGCM and an owner of shares of Common Stock
issued in the Combination.
"▇▇▇▇▇▇▇▇▇ GROUP ESCROW SHARES" shall mean and refer to the
portion of the Escrow Shares owned by ▇▇▇▇▇▇▇▇▇ Group Members, being
an aggregate of 84,375 shares.
"TAX" or "TAXES" shall mean and refer to all net or gross income,
gross receipts, net proceeds, sales, use, ad valorem, value added,
franchise, bank shares, withholding, payroll, employment, excise,
property, deed, stamp, alternative or add-on minimum, environmental,
or other taxes, assessments, duties, fees, levies, or other
governmental charges or assessments of any nature whatever imposed by
any Governmental Requirement, whether disputed or not, together with
any interest, penalties, or additional amounts with respect thereto.
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"TAXING AUTHORITY" shall mean and refer to any Governmental
Authority having or purporting to exercise jurisdiction with respect
to any Tax.
"▇▇▇▇▇▇▇▇▇ INSURANCE POLICES" shall mean and refer to the
following two (2) term life insurance polices now owned by the Company
that were issued upon the life of ▇▇▇▇▇▇▇▇▇ in the total face amount
of $3,500,000: (a) Policy No. 79 660 607 with The Prudential,
contract date November 1, 1990 in the face amount of $1,000,000 for a
term of twenty years and (b) Policy No. 79 660 570 with The
Prudential, contract date November 1, 1990 in the face amount of
$2,500,000 for a term of twenty years.
"▇▇▇▇▇▇▇▇▇ LAWSUIT" refers to an action in the United States
District Court for the Northern District of California, Civil Action
No. 99-0463, filed by ▇▇▇▇▇▇▇▇▇ and the ▇▇▇▇▇▇▇▇▇ Trust against the
Company.
1.2 OTHER DEFINITIONAL PROVISIONS.
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(a) When used in this Agreement, the words "herein", "hereof",
and "hereunder", and words of similar import, refer to this Agreement
as a whole and not to any provision of this Agreement, and the words
"Article", "Section", "Annex", and "Schedule" refer to Articles and
Sections of, and Annexes and Schedules to, this Agreement, unless
otherwise specified.
(b) Whenever the context so requires, the singular includes the
plural and vice versa, and a reference to one gender includes the
other gender and the neuter.
(c) The word "including" (and, with correlative meaning, the
word "include") means that the generality of any description preceding
such word is NOT limited, and the words "shall" and "will" are used
interchangeably and have the same meaning.
1.3 CAPTIONS. Captions to Articles and Sections of, and Annexes
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and Schedules to, this Agreement are included for convenience of
reference only, and such captions shall not constitute a part of this
Agreement for any other purpose or in any way affect the meaning or
construction of any provision of this Agreement.
ARTICLE 2
STOCK AND EQUITY EXCHANGE
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2.1 ▇▇▇▇▇▇▇▇▇ GROUP EXCHANGE.
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(a) The ▇▇▇▇▇▇▇▇▇ Group Members shall release and deliver to the
Company at the Closing an aggregate of 284,375 shares of Common Stock,
consisting of the ▇▇▇▇▇▇▇▇▇ Group Escrow Shares (i.e., 84,375 shares)
and 200,000 shares that are not Escrow Shares (collectively, the
"Returned Shares"), in exchange for which the Company shall deliver to
the ▇▇▇▇▇▇▇▇▇ Group all the JWGCM Equity Interests (together, the
"Equity Exchange"). Delivery to the Company of the ▇▇▇▇▇▇▇▇▇ Group
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Escrow Shares shall be deemed to have been made by the ▇▇▇▇▇▇▇▇▇ Group
Members executing and delivering to the Company a set of written
instructions to the Escrow Agent, dated the Closing Date, requiring
the immediate release and delivery of such shares to the Company (the
"Escrow Release Instructions").
(b) The parties hereby recognize that the transfer by the
Company of the JWGCM Equity Interests required for the Equity Exchange
is subject to certain regulatory approvals by the National Association
of Securities Dealers, Inc. (the "NASD") and the Commissioner of
Corporations of the California Department of Corporations
(collectively, the "Regulatory Approvals") that will require time
after the Closing Date to be obtained. The parties agree that the
Closing shall be deemed to have occurred and become effective on the
Closing Date, for all purposes hereunder other than the Equity
Exchange, without such Regulatory Approvals, and that the Equity
Exchange shall be deemed closed in escrow on the Closing Date, subject
to the Regulatory Approvals being obtained. On the Closing Date, the
Company shall deliver to the law firm of Altheimer & ▇▇▇▇, legal
counsel to the ▇▇▇▇▇▇▇▇▇ Group, (i) a fully executed assignment of the
JWGCM Equity Interests to the ▇▇▇▇▇▇▇▇▇ Group (the "JWGCM
Assignment"), (ii) any and all physical evidence of the JWGCM Equity
Interests and (iii) an assumption agreement with respect to the New
York Lease (such deliveries being referred to herein collectively as,
the "Company Deliveries"), and the ▇▇▇▇▇▇▇▇▇ Group shall deliver to
the law firm of ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, legal counsel to the Company,
(iv) the Escrow Release Instructions fully executed by its members,
(v) the 200,000 shares that are not Escrow Shares together with fully
executed assignments, (vi) an assignment of the New York Lease and
(vii) a ▇▇▇▇ of sale and assignment for the Corporate Finance Items
and the items listed on Schedule 2.3(d) (such deliveries being
referred to herein collectively as, the "▇▇▇▇▇▇▇▇▇ Group Deliveries"),
each to be held by such respective counsel pending receipt of the
Regulatory Approvals (the "Regulatory Closing Date"). On the
Regulatory Closing Date, the Company Deliveries shall be released and
delivered to the ▇▇▇▇▇▇▇▇▇ Group, the ▇▇▇▇▇▇▇▇▇ Group Deliveries shall
be released and delivered to the Company (for delivery of the Escrow
Release Instructions to the Escrow Agent), and the Stipulation of
Dismissal required by Section 5.2 shall be filed.
(c) The parties agree to cooperate fully and in good faith to
obtain the Regulatory Approvals as promptly as possible and to seek
any expedited or accelerated process that may be available therefor.
If the Regulatory Approvals are not obtained by April 15, 1999, then
the Equity Exchange shall be deemed to be abandoned, with the Members'
Capital of JWGCM as of such date being restored to its actual level on
the Closing Date, as prescribed by Section 2.3(b), and the respective
releases provided in Article 5 hereof shall be deemed to be voided.
All other provisions of this Agreement, including Article 3 and
Article 4 shall continue in full force and effect as of and from the
Closing Date. The Company and ▇▇▇▇▇▇▇▇▇ agree that, from and after
the Closing Date, until the earlier of April 15, 1999 and the
Regulatory Closing Date, ▇▇▇▇▇▇▇▇▇ shall be President of JWGCM and
shall have control over all aspects of the operations and affairs of
JWGCM, subject only to reports thereon to Leeds or Marks and to
matters necessary to obtain the Regulatory Approvals. When and if the
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Regulatory Approvals are obtained, the parties shall act in good faith
and take all reasonable actions necessary to cause the results of the
transactions contemplated herein for all purposes (including the
recognition of profit and loss) to be as if the Equity Exchange
occurred on the Closing Date.
2.2 STATUS OF RETURNED SHARES. The Returned Shares shall be free
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and clear of any and all claims, liens, and encumbrances of any kind
whatsoever (except as imposed by the Combination Escrow Agreement with
respect to Escrow Shares, and each person releasing or delivering such
shares, severally and not jointly, hereby represents and warrants the
same to the Company.
2.3 STATUS OF JWGCM AND THE JWGCM EQUITY INTERESTS.
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(a) The JWGCM Equity Interests delivered pursuant to Section 2.1
shall be free and clear of any and all claims, liens, and encumbrances
of any kind whatsoever, and the Company hereby represents and warrants
the same to the ▇▇▇▇▇▇▇▇▇ Group.
(b) On the Closing Date, JWGCM shall have Members' Capital
(exclusive of (i) furniture, equipment, and lease-hold improvements,
net of accumulated depreciation (such furniture, equipment, and lease-
hold improvements, net of accumulated depreciation not to exceed the
amount thereof reflected in JWGCM's audited balance sheet at December
31, 1998), all of which shall otherwise be included in the assets of
JWGCM) (except as otherwise set forth on Schedule 2.3(d)), and (ii)
redeemable preferred members' capital), determined in accordance with
generally accepted accounting principles ("GAAP") as currently being
applied with respect to JWGCM, of $1,250,000, none of which shall be
receivables from the Company or any of its affiliates. In addition,
on the Closing Date, JWGCM shall have net capital, under applicable
regulatory requirements, of $900,000 before regulatory "hair cuts" and
exclusive of redeemable preferred members' capital and the
subordinated loan payable to ▇▇▇▇▇▇▇▇▇ in the approximate amount of
$256,000; if such amount is less than $900,000, the Company will
contribute cash to JWGCM equal to an amount of non-qualifying
receivables or prepaid items sufficient to reach the $900,000 level,
provided that JWGCM shall repay such cash amount to the Company as
such receivables are collected or such prepaid items are expensed.
The calculation of JWGCM members' capital as of the Closing Date shall
not include any assets or liabilities transferred to or assumed by, as
the case may be, the Company pursuant to Sections 2.3(c) or 2.3(d).
The Company shall provide at the Closing a certification by its Chief
Financial Officer as to such JWGCM Members' Capital, and the Company
shall place in a segregated bank account (to which ▇▇▇▇▇▇▇▇▇ and one
of Leeds or Marks shall be the required signatories) the sum of
$75,000 to be used solely for possible post-closing adjustments
payable by the Company with respect to the amount of JWGCM Members'
Capital on the Closing Date. During the ninety (90) day period
immediately following the Closing Date, JWGCM and the Company,
together with their respective outside accountants, shall perform an
analysis of JWGCM's balance sheet as of the Closing Date, in light of
clarifying events since such date, for purposes of making any
adjustments necessary in order for JWGCM Members' Capital to satisfy,
in fact, the above requirements. If any amount is owed by the Company
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to JWGCM, or by JWGCM to the Company, then the party determined to owe
such amount hereby agrees to pay the amount to the other party within
three (3) business days of the determination. The Company further
agrees that any amount owed by it shall be payable by check, draft, or
electronic transfer that is subject only to authorization by Leeds or
Marks. If any amount remains in the segregated bank account after all
amounts owed by the Company to JWGCM as a result of the above
adjustment determinations have been paid, then the Company shall be
entitled to withdraw such remaining amount and close the account.
(c) On the Closing Date, the Company shall accept an assignment
of (and shall assume all obligations under) the lease of JWGCM with
respect to its offices located at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ (the "New York Lease"), if permitted under the
terms thereof. If such assignment of the New York Lease is not
permitted, then (i) the Company and its personnel shall nonetheless be
permitted to occupy and conduct business at the location and (ii) the
Company, in any event, shall assume and become responsible for (and
shall discharge when due) all obligations of JWGCM under the New York
Lease from and after the Closing Date and shall indemnify and hold
harmless JWGCM and its members, affiliates, officers, and agents from
and against any and all rents, assessments, other amounts, claims,
damages, expenses and other costs of any kind whatsoever that might
arise as a result of or in connection with any such obligation or the
Company's continued occupation of the location.
(d) Prior to or at the Closing, JWGCM shall convey, transfer,
and deliver to the Company (or to an affiliate of the Company
designated by it) (i) all of the rights, titles, and interests of
JWGCM in or to all Corporate Finance Items as of the Closing Date and
(ii) the items of specific property listed on Schedule 2.3(d) hereto,
which items of property the Company shall promptly cause to be removed
from the premises of JWGCM and which items shall not be included in
the calculation of JWGCM Members' Capital on the Closing Date. With
respect to any Corporate Finance Item that is not transferable, JWGCM
agrees to pay-over and deliver all amounts received thereunder
promptly to the Company.
(e) Within thirty (30) days after the Closing, JWGCM shall
change its name so as to discontinue forever the use of the word
"Genesis" therein or otherwise with respect to its business or
affairs.
(f) From and after the Closing Date, the personnel of JWGCM
identified on Schedule 2.3(f) (the "Transferred Personnel") shall
become personnel of the Company (or of an affiliate of the Company
designated by it), subject to the decision of any such person not to
join the Company or its affiliate; provided that, in any event, the
Company, as between JWGCM and the Company, shall be responsible for
all employment related costs or expenses associated with all
Transferred Personnel except for amounts accrued and reflected in the
calculation of JWGCM Members' Capital as of the Closing Date.
(g) Except as contemplated by the provisions of this Section
2.3, all assets, liabilities, obligations, and personnel of JWGCM as
of the date hereof shall remain with and continue at JWGCM from and
after the Closing, subject only to (i) the effects of transactions
occurring in the normal course of business operations between the date
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hereof and the Closing Date, and (ii) the decision of individual
personnel not to continue with JWGCM; provided that, prior to the
Closing, the Company shall not be restricted as to possible payments
or distributions it might make from JWGCM; provided further, that the
JWGCM Members' Capital shall in any event satisfy the requirements of
Section 2.3(b). Notwithstanding the foregoing, the Company agrees
that it will file all Returns and pay any Tax due thereon, relating to
federal and state income taxes only, with respect to JWGCM and its
operations for the period from June 12, 1998 to the Closing Date.
(h) The Company agrees that any stock options previously granted
(and outstanding on the Closing Date) by the Company for the purchase
of Common Stock, to personnel of JWGCM who continue with JWGCM after
the Closing, will be deemed fully vested on the Regulatory Closing
Date, and will be exercisable for the 90-day period immediately
following the Regulatory Closing Date.
(i) At the Closing, Leeds, Marks, and any other person who will
be affiliated with the Company after the Closing Date (other than
▇▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇▇▇, if either were still to be deemed such an
affiliate), shall resign, effective the Closing Date, from all
positions they may hold with JWGCM.
2.4 TEMPORARY SPACE FOR JWGENESIS SECURITIES, INC. JWGCM and
the ▇▇▇▇▇▇▇▇▇ Group agree that, for a period of up to 90 days
following the Closing Date, JWGCM shall permit personnel of JWGenesis
Securities, Inc., an affiliate of the Company ("JWG Securities"),
located at the San Francisco offices of JWGCM and the JWG Securities
equipment they are using (and any replacements for such personnel or
equipment) to remain in and use the same space at that location
(without any enlargement or increase) they presently occupy. The
Company shall reimburse to JWGCM, on a monthly basis, any and all
costs or expenses that JWGCM may incur as a result of such occupation
and shall use its best efforts to effect the relocation of those
personnel and equipment as promptly as possible and, in any event,
within 90 days following the Closing Date.
2.5 MISCELLANEOUS MATTERS TO ASSIST NEW YORK OFFICE.
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(a) JWGCM and the ▇▇▇▇▇▇▇▇▇ Group agree that, for a transition
period of up to 90 days following the Closing Date, JWGCM will
continue to provide from its San Francisco office the back office and
related computer support services that it currently provides for the
Company's investment banking and corporate finance operations being
conducted at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇.
The Company agrees to pay JWGCM, on a monthly basis its actual costs
of providing such support services, to effect whatever transition may
be necessary to obviate the need therefor, and to remove from JWGCM's
San Francisco office any and all equipment or other items of the
Company to be retained under this Agreement (as specified in Schedule
2.3(d)) not later than 90 days following the Closing Date.
(b) JWGCM and the ▇▇▇▇▇▇▇▇▇ Group agree that, (i) for a
transition period of 120 days following the Closing Date, JWGCM shall
provide the back office support necessary to maintain as active and
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accessible (including for voice mail deposits and retrievals) the
private direct dial telephone numbers presently assigned to ▇▇▇▇▇▇▇
▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇, by virtue of their respective historical
employment relationships with JWGCM, and (ii) to the extent permitted
by JWGCM arrangements with the telephone service carrier, and subject
to payment by the Company of any costs to JWGCM therefor, JWGCM will
take any reasonable steps the Company may request in an effort to
obtain the transfer of such telephone numbers to the Company.
ARTICLE 3
REGISTRATION RIGHTS AGREEMENTS
------------------------------
3.1 MANDATORY REGISTRATION. The Company shall prepare and, on
----------------------
or prior to twenty (20) business days after the date of the Closing
(the "Filing Date"), file with the Commission a registration statement
on an appropriate form of the Commission covering the resale of all of
the Registrable Securities by the members of the ▇▇▇▇▇▇▇▇▇ Group (the
"Registration Statement"). The Registration Statement (and each
amendment or supplement thereto, and each request for acceleration of
effectiveness thereof) shall be provided to (and subject to the
approval of (which approval shall not be unreasonably withheld or
delayed)) the ▇▇▇▇▇▇▇▇▇ Group and their counsel prior to its filing or
other submission.
3.2 UNDERWRITTEN OFFERING. If any offering of Registrable
---------------------
Securities pursuant to a Registration Statement pursuant to Section
3.1 hereof involves an underwritten offering, ▇▇▇▇▇▇▇▇▇ shall have the
right to select the investment banker or bankers to administer and
manage the offering; provided that such investment banker or bankers
shall be reasonably satisfactory to the Company.
3.3 UNEXCUSED DELAY PAYMENTS BY THE COMPANY. The Company shall use
---------------------------------------
its best efforts to cause the Registration Statement to become effective
by the Commission as soon as practicable. If, notwithstanding such best
efforts, (i) the Registration Statement has not been filed by the Filing
Date; (ii) the Registration Statement has not been declared effective by
the Commission on or before the ninetieth (90th) day following the Filing
Date (the "Registration Deadline"); (iii) after the Registration Statement
has been declared effective by the Commission (such date being the "Effective
Date") but has not been continuously available for sales of Registrable
Securities pursuant thereto by ▇▇▇▇▇▇▇▇▇ or the ▇▇▇▇▇▇▇▇▇ Trust for at
least one-hundred twenty (120) days, sales of Registrable Securities
cannot be made pursuant thereto (by reason of a stop order or the
Company's failure to update the Registration Statement or any
prospectus contained therein, or any other reason outside the control
of the ▇▇▇▇▇▇▇▇▇ Group); or (iv) after the Effective Date and the
Registration Statement has been continuously available for sales of
Registrable Securities pursuant thereto by the members of the
▇▇▇▇▇▇▇▇▇ Group for at least one-hundred twenty (120) days, sales of
the Registrable Securities cannot be made pursuant thereto (by reason
of a stop order or the Company's failure to update the Registration
Statement or any prospectus contained therein, or any other reason
outside the control of the ▇▇▇▇▇▇▇▇▇ Group), then the Company will
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make payments to ▇▇▇▇▇▇▇▇▇ and the ▇▇▇▇▇▇▇▇▇ Trust (with respect to an
event triggered by clauses (i), (ii), or (iii) above) and to all
members of the ▇▇▇▇▇▇▇▇▇ Group (with respect to an event triggered by
clause (iv) above) in such amounts and at such times ("Unexcused Delay
Payments") as shall be determined pursuant to Annex A hereto as
damages to the ▇▇▇▇▇▇▇▇▇ Group by reason of any such delay in or
reduction of their ability to sell the Registrable Securities (which
remedy shall be exclusive, except for the remedy of specific
performance provided in Section 7.2 hereof). Unexcused Delay Payments
shall be paid in cash, and shall be made within five (5) days after
the end of each period that gives rise to such obligation, provided
that, if the event giving rise to a Payment Measuring Date under Annex
A has not been cured within one or more consecutive thirty (30)-day-
periods, then an interim calculation shall be made at the end of each
such thirty (30)-day period, using the Payment Measuring Date and the
last day in such period as if it were the cure date, until the event
is cured and a final calculation can be made as contemplated by Annex
A. Interim Unexcused Delay Payments shall be made within five (5)
days following each interim calculation. With respect to all members
of the ▇▇▇▇▇▇▇▇▇ Group, the amount due after any second or subsequent
interim calculations, and after the final calculation following the
cure, shall be appropriately adjusted to account fully for any amount
previously paid by the Company as an interim payment with respect to
an event triggered by clause (iv) above. Such adjustments with
respect to an event triggered by clause (iv) above might result in the
Company's entitlement to a refund of all or a portion of a previous
interim payment, and, in such event, the ▇▇▇▇▇▇▇▇▇ Group agrees to
make any such refund within five (5) days of being notified thereof in
writing by the Company. No adjustments shall be made to Interim
Unexcused Delay Payments made with respect to an event triggered by
clauses (i), (ii) or (iii) above.
3.4. CERTAIN TOLLING OF DATES AND EXCUSABLE DELAYS.
---------------------------------------------
(a) The Filing Date and the Registration Deadline, as the case
may be, shall be extended on a day-per-day basis by the number of days
in excess of three (3) business days that the Company is required to
wait for comments or approval by the ▇▇▇▇▇▇▇▇▇ Group or its counsel or
other advisors (after delivery of a required document to such person)
to whom the Company is required to furnish the Registration Statement
or any other document hereunder, or from whom the Company is required
to obtain approval hereunder, prior to the filing or submission of
such document to the Commission or other applicable regulatory
authority.
(b) Notwithstanding the provisions of Section 3.3(iv) hereof,
the Company shall not be required to make any Unexcused Delay Payment
after the Effective Date if the Registration Statement has been
continuously available for sales of Registrable Securities pursuant
thereto by the members of the ▇▇▇▇▇▇▇▇▇ Group for at least one hundred
twenty (120) days, if the suspension of the availability of the
Registration Statement or any prospectus that forms a part thereof, or
amendment or supplement thereto, for use to offer and sell Registrable
Securities shall be due to the occurrence, also after the Effective
Date, of an event or transaction that causes the information in the
Registration Statement or any prospectus that forms a part thereof to
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contain or omit a material fact necessary to cause the information in
the Registration Statement or any such prospectus, or amendment or
supplement thereto, in light of such event or transaction, to be
misleading in any material respect (a "Material Disclosable
Development"). The Company shall promptly notify in writing the
▇▇▇▇▇▇▇▇▇ Group of the occurrence of any Material Disclosable
Development and shall use its reasonable best efforts to take all
necessary actions so the effectiveness and availability for resales
(or the continuation of the effectiveness and availability for
resales) of the Registration Statement required hereby may be achieved
as promptly as possible; provided that in the event ▇▇▇▇▇▇▇▇▇ in good
faith does not believe the Company is using its reasonable best
efforts, he may deliver a written notice to Company stating such
opinion, in which event if the Registration Statement is not available
for resales within ten (10) business days from the date of the notice,
(the "Excuse Deadline"), then the delay shall no longer be excused and
the Excuse Deadline shall become a Payment Measuring Date for purposed
of Annex A and Section 3.3(iv).
3.5 PIGGY-BACK REGISTRATIONS. If the Registration Statement
------------------------
required by Section 3.1 shall not have been filed or been declared
effective, or if it shall no longer be effective or otherwise
available for use by the ▇▇▇▇▇▇▇▇▇ Group and any of the Registrable
Securities owned by members of the ▇▇▇▇▇▇▇▇▇ Group remain unsold, and
in such event if, at any time prior to the expiration of the
Registration Period (as hereinafter defined), the Company shall file
with the Commission a registration statement relating to an offering
for its own account or the account of others under the Securities Act
of any of its equity securities (other than on Form S-4 or Form S-8 or
their then equivalents relating to equity securities to be issued
solely in connection with any acquisition of any entity or business or
equity securities issuable in connection with stock option or other
employee benefit plans), THEN (a) the Company shall send to each
member of the ▇▇▇▇▇▇▇▇▇ Group who has a right to have Registrable
Securities covered by a Registration Statement pursuant to this
Agreement written notice of such determination and (b) if within
fifteen (15) days after the date of such notice, such member shall so
request in writing, the Company shall include in such registration
statement all or any part of the Registrable Securities such member
requests to be registered, except that if, in connection with any
underwritten public offering for the account of the Company the
managing underwriter(s) thereof shall impose a limitation on the
number of shares of Common Stock which may be included in the
Registration Statement because, in such underwriter(s)' judgment,
marketing or other factors dictate such limitation is necessary to
facilitate public distribution, then the Company shall be obligated to
include in such Registration Statement only such limited portion of
the Registrable Securities with respect to which such member has
requested inclusion hereunder as the underwriter shall permit. Any
exclusion of Registrable Securities shall be made pro rata among the
members of the ▇▇▇▇▇▇▇▇▇ Group seeking to include Registrable
Securities, in proportion to the number of Registrable Securities
sought to be included by the ▇▇▇▇▇▇▇▇▇ Group; provided, however, that
the Company shall not exclude any Registrable Securities unless the
Company has first excluded all outstanding securities, the holders of
which are not entitled to inclusion of such securities in such
Registration Statement or are not entitled to pro rata inclusion with
the Registrable Securities; and provided, further, however, that,
after giving effect to the immediately preceding proviso, any
exclusion of Registrable Securities shall be made pro rata with
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holders of other securities not having a senior or preferential right
to include such securities in the Registration Statement, which shall
include the Company, and the holders of Registrable Securities have
been offered any over allotment option to be granted to the
underwriters. No right to registration of Registrable Securities
under this Section 3.5 shall be construed to limit any registration
required under Section 3.1 or 3.6 hereof. If an offering in
connection with which a member of the ▇▇▇▇▇▇▇▇▇ Group is entitled to
registration under this Section 3.5 is an underwritten offering, then
each member whose Registrable Securities are included in such
Registration Statement shall, unless otherwise agreed by the Company,
offer and sell such Registrable Securities in an underwritten offering
using the same underwriter or underwriters and, subject to the
provisions of this Agreement, on the same terms and conditions as
other shares of Common Stock included in such underwritten offering.
3.6 ADDITIONAL OBLIGATIONS OF THE COMPANY. In connection with
-------------------------------------
the registration of the Registrable Securities, the Company shall have
the following obligations:
(a) The Company shall prepare promptly and file with the
Commission the Registration Statement required by Section 3.1, and
cause such Registration Statement relating to Registrable Securities
to become effective as soon as practicable after such filing, and keep
the Registration Statement effective at all times until such date as
is the earlier of (i) the date on which all of the Registrable
Securities have been sold, (ii) the date on which all of the
Registrable Securities (in the reasonable opinion of counsel to the
▇▇▇▇▇▇▇▇▇ Group) may be immediately sold to the public without
registration and without restriction as to the number of Registrable
Securities to be sold, whether pursuant to Rule 144 or otherwise, and
(iii) June 13, 2001 (the "Registration Period"). The Registration
Statement (including any amendments or supplements thereto and
prospectuses contained therein and all documents incorporated by
reference therein) shall not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein, or necessary to make the statements therein not misleading.
(b) The Company shall prepare and file with the Commission such
amendments (including post-effective amendments) and supplements to
the Registration Statement and the prospectus used in connection with
the Registration Statement as may be necessary to keep the
Registration Statement effective at all times during the Registration
Period, and, during such period, comply with the provisions of the
Securities Act applicable to the Company with respect to the
disposition of all Registrable Securities in accordance with the
intended methods of disposition by the seller or sellers thereof as
set forth in the Registration Statement.
(c) The Company shall furnish to each member of the ▇▇▇▇▇▇▇▇▇
Group whose Registrable Securities are included in the Registration
Statement and its legal counsel (i) promptly after the same is
prepared and publicly distributed, filed with the Commission, or
received by the Company, one copy of the Registration Statement and
any amendment thereto, each preliminary prospectus and prospectus and
each amendment or supplement thereto, and, in the case of the
Registration Statement referred to in Section 3.1, each letter written
-13-
by or on behalf of the Company to the Commission or the staff of the
Commission, and each item of correspondence from the Commission or the
staff of the Commission, in each case relating to such Registration
Statement (other than any portion, if any, thereof which contains
information for which the Company has sought confidential treatment),
and (ii) such number of copies of a prospectus, including a
preliminary prospectus, and all amendments and supplements thereto and
such other documents as such member of the ▇▇▇▇▇▇▇▇▇ Group may
reasonably request in order to facilitate the disposition of the
Registrable Securities owned (or to be owned) by such member of the
▇▇▇▇▇▇▇▇▇ Group.
(d) The Company shall use reasonable efforts to (i) register and
qualify the Registrable Securities covered by the Registration
Statement under securities laws of such jurisdictions in the United
States as each member of the ▇▇▇▇▇▇▇▇▇ Group who holds (or has the
right to hold) Registrable Securities being offered reasonably
requests, (ii) prepare and file in those jurisdictions such amendments
(including post-effective amendments) and supplements to such
registrations and qualifications as may be necessary to maintain the
effectiveness thereof during the Registration Period, (iii) take such
other actions as may be necessary to maintain such registrations and
qualifications in effect at all times during the Registration Period,
and (iv) take all actions reasonably necessary or advisable to qualify
the Registrable Securities for sale in such jurisdictions; provided,
however, that the Company shall not be required in connection
therewith or as a condition thereto to qualify to do business in any
jurisdiction where it would not otherwise be required to qualify but
for this Section 3.6(d), or file a general consent to service of
process in any such jurisdiction.
(e) If the members of the ▇▇▇▇▇▇▇▇▇ Group who hold a majority in
interest of the Registrable Securities being offered in an offering
pursuant to a Registration Statement or any amendment or supplement
thereto under Section 3.1 or 3.6(b) hereof select underwriters for the
offering, the Company shall enter into and perform its obligations
under an underwriting agreement, in usual and customary form,
including, without limitation, customary indemnification and
contribution obligations, with the underwriters of such offering.
(f) As soon as practicable after becoming aware of such event,
the Company shall notify (by telephone and also by facsimile and
reputable overnight courier) each member of the ▇▇▇▇▇▇▇▇▇ Group of the
happening of any event, of which the Company has knowledge, as a
result of which the prospectus included in the Registration Statement,
as then in effect, includes an untrue statement of a material fact or
omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, and use its
best efforts promptly (but in any event in accordance with the
provisions of Section 3.4(b)) to prepare a supplement or amendment to
the Registration Statement to correct such untrue statement or
omission, and deliver such number of copies of such supplement or
amendment to each member of the ▇▇▇▇▇▇▇▇▇ Group as such member of the
▇▇▇▇▇▇▇▇▇ Group may reasonably request.
-14-
(g) The Company shall use its best efforts to prevent the
issuance of any stop order or other suspension of effectiveness of a
Registration Statement, and, if such an order is issued, to obtain the
withdrawal of such order at the earliest practicable time and to
notify (by telephone and also by facsimile and reputable overnight
carrier) each member of the ▇▇▇▇▇▇▇▇▇ Group who holds Registrable
Securities being sold (or, in the event of an underwritten offering,
the managing underwriters) of the issuance of such order and the
resolution thereof.
(h) The Company shall permit a single firm of counsel designated
by the ▇▇▇▇▇▇▇▇▇ Group to review the Registration Statement and all
amendments and supplements thereto a reasonable period of time prior
to their filing with the SEC, and not file any document in a form to
which such counsel reasonably objects.
(i) The Company shall make generally available to its security
holders as soon as practical, but not later than ninety (90) days
after the close of the period covered thereby, an earnings statement
(in form complying with the provisions of Rule 158 under the
Securities Act) covering a twelve-month period beginning not later
than the first day of the Company's first full fiscal quarter next
following the effective date of the Registration Statement.
(j) At the request of any member of the ▇▇▇▇▇▇▇▇▇ Group, the
Company shall furnish, on the date of effectiveness of the
Registration Statement, and thereafter from time to time on such
dates, on which an amendment or supplement to the Registration
Statement may be filed or declared effective, as a member of the
▇▇▇▇▇▇▇▇▇ Group may reasonably request (i) an opinion, dated as of
such applicable date, from counsel representing the Company addressed
to the ▇▇▇▇▇▇▇▇▇ Group and in form, scope and substance as is
customarily given in an underwritten public offering and (ii) a
letter, dated as of such applicable date, from the Company's
independent certified public accountants addressed to the ▇▇▇▇▇▇▇▇▇
Group and in form, scope and substance as customarily given to
underwriters in an underwritten public offering.
(k) The Company shall, upon reasonable notice and at reasonable
times and locations so as not to be unduly disruptive of the Company's
business and affairs, make available for inspection by (i) a duly
authorized representative of the ▇▇▇▇▇▇▇▇▇ Group, (ii) any underwriter
participating in any disposition pursuant to the Registration
Statement, (iii) one firm of attorneys and one firm of accountants
retained by the ▇▇▇▇▇▇▇▇▇ Group, and (iv) one firm of attorneys
retained by all such underwriters (collectively, the "Inspectors") all
pertinent financial and other records, and pertinent corporate
documents and properties of the Company (collectively, the "Records"),
as shall be reasonably deemed necessary by each Inspector to enable
each Inspector to exercise its due diligence responsibility, if any,
and cause the Company's officers, directors and employees to supply
all information which any Inspector may reasonably request for
purposes of such due diligence; provided, however, that each Inspector
shall use such Records solely for such purposes and shall hold in
confidence and shall not make any disclosure (except to a member of
the ▇▇▇▇▇▇▇▇▇ Group) of any Record or other information which
constitutes Confidential Information of the Company as defined in this
Agreement, unless (v) the disclosure of such Records is necessary to
-15-
avoid or correct a misstatement or omission in any Registration
Statement, (vi) the release of such Records is ordered pursuant to a
subpoena or other order from a court or government body of competent
jurisdiction, or is otherwise required by applicable law or legal
process, or (vii) the information in such Records has been made
generally available to the public other than by disclosure in
violation of this Agreement or any other agreement by which such
person is bound.
(l) The Company shall hold in confidence and not make any
disclosure of information concerning a member of the ▇▇▇▇▇▇▇▇▇ Group,
which constitutes Confidential Information of that person as defined
in this Agreement, provided to the Company in connection with the
registration contemplated hereby, unless (i) disclosure of such
information is necessary to comply with federal or state securities or
Tax laws, (ii) the disclosure of such information is necessary to
avoid or correct a misstatement or omission in any Registration
Statement, (iii) the release of such information is ordered pursuant
to a subpoena or other order from a court or governmental body of
competent jurisdiction or is otherwise required by applicable law or
legal process, (iv) such information has been made generally available
to the public other than by disclosure in violation of this Agreement
or any other agreement by which such person is bound, or (v) such
member of the ▇▇▇▇▇▇▇▇▇ Group consents to the form and content of any
such disclosure. The Company agrees that it shall, upon learning that
disclosure of such information concerning a member of the ▇▇▇▇▇▇▇▇▇
Group is sought in or by a court or governmental body of competent
jurisdiction or through other means, give notice to such member of the
▇▇▇▇▇▇▇▇▇ Group prior to making such disclosure, and allow the member
of the ▇▇▇▇▇▇▇▇▇ Group, at its expense, to undertake appropriate
action to prevent disclosure of, or to obtain a protective order for,
such information.
(m) The Company shall cause the listing (and continuation of the
listing) of all the Registrable Securities covered by the Registration
Statement on the American Stock Exchange ("AMEX"; or such securities
exchange or quotation system on which the Common Stock is then listed
or quoted), and cause the Registrable Securities to be quoted or
listed on each additional national securities exchange or quotation
system upon which the Common Stock is then listed or quoted.
(n) The Company shall cooperate with each member of the
▇▇▇▇▇▇▇▇▇ Group who holds Registrable Securities being offered and the
managing underwriter or underwriters, if any, to facilitate the timely
preparation and delivery of certificates (not bearing any restrictive
legends) representing Registrable Securities to be offered pursuant to
the Registration Statement and enable such certificates to be in such
denominations or amounts, as the case may be, as the managing
underwriter or underwriters, if any, or the ▇▇▇▇▇▇▇▇▇ Group may
reasonably request and registered in such names as the managing
underwriter or underwriters, if any, or the ▇▇▇▇▇▇▇▇▇ Group may
request, and, within one (1) business day after the Registration
Statement is ordered effective by the Commission, the Company shall
cause legal counsel selected by the Company to deliver to the transfer
agent for the Registrable Securities (with copies to the members of
the ▇▇▇▇▇▇▇▇▇ Group whose Registrable Securities are included in such
Registration Statement) an opinion of such counsel to the effect that
-16-
they are of the opinion that the Registrable Securities have been
registered under the Securities Act.
(o) At the request of any member of the ▇▇▇▇▇▇▇▇▇ Group, the
Company shall promptly prepare and file with the Commission such
amendments (including post-effective amendments) and supplements to a
Registration Statement and the prospectus used in connection with the
Registration Statement as may be necessary in order to change the plan
of distribution set forth in such Registration Statement, except that
the Company shall not be required to convert to an underwritten
offering any registration of Registrable Securities that has already
been filed with the Commission in accordance with the requirement of
this Article 3.
(p) The Company shall comply with all applicable laws related to
the Registration Statement and offering and sale of securities
thereunder, and all applicable rules and regulations of governmental
authorities in connection therewith (including, without limitation,
the Securities Act and the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated by the Commission).
(q) From and after the date of this Agreement, and during the
Registration Period, the Company shall not grant to the holders of any
securities of the Company any senior or preferred rights, relative to
the rights of the ▇▇▇▇▇▇▇▇▇ Group hereunder, to include any of their
securities in any registration statement or any amendment or
supplement thereto under Section 3.1 or 3.6(b) hereof, without the
consent of the holders of a majority of the Registrable Securities.
(r) All expenses (other than underwriting discounts and
commissions, fees or expenses of counsel or other advisors to members
of the ▇▇▇▇▇▇▇▇▇ Group, or any amounts required by law to be paid by
the persons actually selling securities), incurred in connection with
the registrations, filings, or qualifications pursuant to Section 3.1
or 3.6, including all registration, listing and qualification fees,
printers and accounting fees, and the fees and disbursements of
counsel for the Company, shall be borne by the Company.
3.7 CERTAIN REGISTRATION OBLIGATIONS OF THE SELLING MEMBERS OF
----------------------------------------------------------
THE ▇▇▇▇▇▇▇▇▇ GROUP.
-------------------
(a) The performance by the Company of its obligations under
Sections 3.1 through 3.6 as to any ▇▇▇▇▇▇▇▇▇ Group Member offering or
selling Registrable Securities under the Registration Statement shall
be subject to compliance by the ▇▇▇▇▇▇▇▇▇ Group Member with all
reasonable requests by the Company or its counsel for information,
documents, or certificates necessary for such performance.
(b) Each ▇▇▇▇▇▇▇▇▇ Group Member offering or selling Registrable
Securities under the Registration Statement (a "Resale Seller") agrees
that, after the Registration Statement becomes effective, upon receipt
of written notice from the Company that either (i) the prospectus that
forms a part of the Registration Statement, as then in effect (the
"Resale Prospectus"), contains an untrue statement of a material fact
or omits to state any material fact required to be stated therein or
-17-
necessary to make the statements therein not misleading in light of
the circumstances then existing, or (ii) the Resale Prospectus
requires amendment or supplementation in order to comply with any
applicable provisions of the Securities Act or of blue sky or
securities law of any relevant jurisdiction, the Resale Seller shall
cease making offers and sales pursuant to such Resale Prospectus, and
shall return to the Company any remaining copies of the Resale
Prospectus. Following receipt of a revised prospectus, the ▇▇▇▇▇▇▇▇▇
Group Member shall be free to resume making offers of Registrable
Securities.
3.8 REGISTRATION INDEMNIFICATION. In the event any Registrable
----------------------------
Securities are included in a registration statement under this
Agreement:
(a) To the extent permitted by law, the Company will indemnify,
hold harmless and defend each member of the ▇▇▇▇▇▇▇▇▇ Group who holds
such Registrable Securities, each underwriter of Registrable
Securities and the directors, officers, partners, members, employees,
agents and persons who control any member of the ▇▇▇▇▇▇▇▇▇ Group
within the meaning of Section 15 of the Securities Act or Section 20
of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), if any (each, an "Indemnified Person"), against any joint or
several losses, claims, damages, liabilities or expenses
(collectively, together with actions, proceedings or inquiries by any
regulatory or self-regulatory organization, whether commenced or
threatened, in respect thereof, "Claims") to which any of them may
become subject insofar as such Claims arise out of or are based upon:
(i) any untrue statement or alleged untrue statement of a material
fact in a Registration Statement or the omission or alleged omission
to state therein a material fact required to be stated or necessary to
make the statements therein not misleading, (ii) any untrue statement
or alleged untrue statement of a material fact contained in any
preliminary prospectus if used prior to the effective date of such
Registration Statement, or contained in the final prospectus (as
amended or supplemented, if the Company files any amendment thereof or
supplement thereto with the Commission) or the omission or alleged
omission to state therein any material fact necessary to make the
statements made therein, in light of the circumstances under which the
statements therein were made, not misleading, or (iii) any violation
or alleged violation by the Company of the Securities Act, the
Exchange Act, any other law, including, without limitation, any state
securities law, or any rule or regulation thereunder relating to the
offer or sale of the Registrable Securities (the matters in the
foregoing clauses (i) through (iii) being, collectively,
"Violations"). Subject to the restrictions set forth in Section
3.8(c) with respect to the number of legal counsel, the Company shall
reimburse the ▇▇▇▇▇▇▇▇▇ Group, each such underwriter and controlling
person, and each such other Indemnified Person, promptly as such
expenses are incurred and are due and payable, for any reasonable
legal fees or other reasonable expenses incurred by them in connection
with investigating or defending any such Claim. Notwithstanding
anything to the contrary contained herein, the indemnification
agreement contained in this Section 3.8: (iv) shall not apply to an
Indemnified Person with respect to a Claim arising out of or based
upon a Violation which occurs in reliance upon and in conformity with
information furnished in writing to the Company by such Indemnified
Person, or a duly authorized person acting on its behalf, expressly
for use in the Registration Statement, any prospectus contained therein
-18-
or any such amendment thereof or supplement thereto; (v)
shall not apply to amounts paid in settlement of any Claim if such
settlement is effected without the prior written consent of the
Company, which consent shall not be unreasonably withheld; and (vi)
with respect to any preliminary prospectus, shall not inure to the
benefit of any Indemnified Person if the untrue statement or omission
of material fact contained in the preliminary prospectus was corrected
on a timely basis in the prospectus, as then amended or supplemented,
if such corrected prospectus was timely made available by the Company
pursuant to Section 3.6(f) hereof, and the Indemnified Person was
promptly advised in writing not to use the incorrect prospectus prior
to the use giving rise to a Violation and such Indemnified Person,
notwithstanding such advice, used it. Such indemnity shall remain in
full force and effect regardless of any investigation made by or on
behalf of the Indemnified Person.
(b) In connection with any Registration Statement in which a
member of the ▇▇▇▇▇▇▇▇▇ Group is participating, each such member of
the ▇▇▇▇▇▇▇▇▇ Group agrees severally and not jointly to indemnify,
hold harmless and defend, to the same extent and in the same manner
set forth in Section 3.8(a), the Company, each of its directors, each
of its officers who signs the Registration Statement, its employees,
agents and persons, if any, who control the Company within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act,
any underwriter, and any other stockholder selling securities pursuant
to the Registration Statement, together with its directors, officers
and members, and any person who controls such stockholder or
underwriter within the meaning of the Securities Act or the Exchange
Act (such an "Indemnified Party"), against any Claim to which any of
them may become subject, under the Securities Act, the Exchange Act or
otherwise, insofar as such Claim arises out of or is based upon any
Violation, in each case to the extent (and only to the extent) that
such Violation occurs in reliance upon and in conformity with written
information furnished to the Company by such member of the ▇▇▇▇▇▇▇▇▇
Group, or a duly authorized person acting on its behalf, expressly for
use in connection with such Registration Statement, any prospectus
contain therein, or any amendment thereof or supplement thereto; and
subject to Section 3.8(c), such member of the ▇▇▇▇▇▇▇▇▇ Group will
reimburse any legal or other expenses (promptly as such expenses are
incurred and are due and payable) reasonably incurred by them in
connection with investigating or defending any such Claim; provided,
however, that the indemnity agreement contained in this Section 3.8(b)
shall not apply to amounts paid in settlement of any Claim if such
settlement is effected without the prior written consent of such
member of the ▇▇▇▇▇▇▇▇▇ Group, which consent shall not be unreasonably
withheld; provided, further, however, that a member of the ▇▇▇▇▇▇▇▇▇
Group shall be liable under this Agreement (including this Section
3.8(b)) for only that amount as does not exceed the net proceeds
actually received by such member of the ▇▇▇▇▇▇▇▇▇ Group as a result of
the sale of Registrable Securities pursuant to such Registration
Statement. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such
Indemnified Party. Notwithstanding anything to the contrary contained
herein, the indemnification agreement contained in this Section 3.8(b)
with respect to any preliminary prospectus shall not inure to the
benefit of any Indemnified Party if the untrue statement or omission
of material fact contained in the preliminary prospectus was corrected
-19-
on a timely basis in the prospectus, as then amended or supplemented,
and the Indemnified Party failed to utilize such corrected prospectus.
(c) Promptly after receipt by an Indemnified Person or
Indemnified Party under this Section 3.8 of notice of the commencement
of any action (including any governmental action), such Indemnified
Person or Indemnified Party shall, if a Claim in respect thereof is to
made against any indemnifying party under this Section 3.8, 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 or the Indemnified Party, as the case
may be; provided, however, that such indemnifying party shall
diligently pursue such defense and that such indemnifying party shall
not be entitled to assume such defense, and an Indemnified Person or
Indemnified Party shall have the right to retain its own counsel with
the fees and expenses to be paid by the indemnifying party, if (i) the
representation by such counsel of the Indemnified Person or
Indemnified Party and the indemnifying party would be inappropriate
due to actual or potential conflicts of interest between such
Indemnified Person or Indemnified Party and any other party
represented by such counsel in such proceeding or (ii) the actual or
potential defendants in, or targets of, any such action include both
the indemnifying party and the Indemnified Person or the Indemnified
Party, as the case may be, and any such Indemnified Person or
Indemnified Party reasonably determines that there may be legal
defenses available to such Indemnified Person or Indemnified Party
which are different from or in addition to those available to such
indemnifying party. The indemnifying party shall pay for only one
separate legal counsel for the Indemnified Persons or the Indemnified
Parties, as applicable, and such legal counsel shall be selected by
▇▇▇▇▇▇▇▇▇ Group Members holding a majority-in-interest of the
Registrable Securities included in the Registration Statement to which
the Claim relates, if members of the ▇▇▇▇▇▇▇▇▇ Group are entitled to
indemnification hereunder, or by the Company, if the Company is
entitled to indemnification hereunder, as applicable. 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 or
Indemnified Party under this Section 3.8, except to the extent that
the indemnifying party is actually prejudiced in its ability to defend
such action. The indemnification required by this Section 3.8 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.
(d) To the extent any indemnification by an indemnifying party
is prohibited or limited by law, the indemnifying party agrees to make
the maximum contribution with respect to any amounts for which it
would otherwise be liable under this Section 3.8 to the fullest extent
permitted by law; provided, however, that (i) no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation, and (ii)
contribution (together with any indemnification or other obligations
-20-
under this Agreement) by any seller of Registrable Securities shall be
limited in amount to the net amount of proceeds received by such
seller from the sale of such Registrable Securities.
3.9. PERIODIC REPORTS. With a view to making available to the
----------------
members of the ▇▇▇▇▇▇▇▇▇ Group the benefits of Rule 144 under the
Securities Act or any other similar rule or regulation of the
Commission that may at any time permit the ▇▇▇▇▇▇▇▇▇ Group to sell
securities of the Company to the public without registration ("Rule
144"), the Company, so long as any Registrable Securities are unsold,
agrees to the following:
(a) The Company shall use its best efforts to file with the
Commission in a timely manner, and make and keep available, all
reports and other documents required of the Company under the
Securities Act or the Exchange Act, so long as the Company remains
subject to such requirements and the filing and availability of such
reports and other documents are required by applicable provisions of
Rule 144 for Registrable Securities to be sold.
(b) The Company shall furnish to each member of the ▇▇▇▇▇▇▇▇▇
Group, so long as such member of the ▇▇▇▇▇▇▇▇▇ Group holds Registrable
Securities, promptly upon request, (i) a written statement by the
Company with respect to its compliance with the reporting requirements
of Rule 144, the Securities Act and the Exchange Act, (ii) a copy of
the most recent annual or quarterly report of the Company and such
other reports and documents so filed by the Company, and (iii) such
other information as may be reasonably requested to permit the
▇▇▇▇▇▇▇▇▇ Group to sell such securities pursuant to Rule 144 without
registration.
ARTICLE 4
OTHER CONCILIATION AGREEMENTS
-----------------------------
4.1 ▇▇▇▇▇▇▇▇▇ EMPLOYMENT AND RELATED MATTERS. On the Closing
----------------------------------------
Date, the ▇▇▇▇▇▇▇▇▇ Employment Agreement shall terminate (and all
rights and obligations of any party thereunder shall terminate
regardless of whether it is otherwise provided in the agreement that
they survive termination of the agreement), ▇▇▇▇▇▇▇▇▇ shall resign
from the Board of Directors of the Company (the "Board") and all other
positions he holds with the Company or its affiliates, effective the
Closing Date, and the Company shall pay to ▇▇▇▇▇▇▇▇▇ a lump sum cash
payment in the amount equal to the amount of all obligations it has or
may have to ▇▇▇▇▇▇▇▇▇ under the ▇▇▇▇▇▇▇▇▇ Employment Agreement or as a
result of his employment by the Company, through and including the
Closing Date, as severance and satisfaction in full of such
obligations. The amount of such obligations is estimated to be
approximately $323,682 on the anticipated date of the Closing.
▇▇▇▇▇▇▇▇▇ agrees to use reasonable efforts to provide to Leeds any
receipts or other records he has that would facilitate the Company's
ability to achieve favorable tax treatment with respect to the
payments made to ▇▇▇▇▇▇▇▇▇. ▇▇▇▇▇▇▇▇▇ also agrees to request, and use
his reasonable best efforts to obtain, the resignation of ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇ from the Board, effective the Closing Date.
-21-
4.2 ▇▇▇▇▇▇▇▇▇ EMPLOYMENT AND RELATED MATTERS. On the Closing
----------------------------------------
Date, the ▇▇▇▇▇▇▇▇▇ Employment Agreement shall terminate (and all
rights and obligations of any party thereunder shall terminate
regardless of whether it is otherwise provided in the agreement that
they survive termination of the agreement), ▇▇▇▇▇▇▇▇▇ shall resign
from the Board and all other positions he holds with the Company or
its affiliates, effective the Closing Date, and the Company shall pay
to ▇▇▇▇▇▇▇▇▇ (a) a lump sum cash amount of $62,500 as severance and
(b) a bonus equal to three percent (3%) of the Company's net income,
pre-tax, with respect to the Company's 1998 fiscal year and the period
through and including February 28, 1999 for the Company's 1999 fiscal
year (the "▇▇▇▇▇▇▇▇▇ Bonus"), which together shall constitute
satisfaction in full of any and all obligations it may have to
▇▇▇▇▇▇▇▇▇ under the ▇▇▇▇▇▇▇▇▇ Employment Agreement or as a result of
his employment by the Company or JWGCM through the Closing Date. The
▇▇▇▇▇▇▇▇▇ Bonus is currently estimated to be approximately $50,000
with respect to the 1998 fiscal year plus $125,000 with respect to the
period through February 28, 1999; the above estimates only include
realized gains from the Company's sale in February 1999 of 75% of its
stock ownership in Knight/Trimark Group, Inc. ("NITE") and assume no
operating earnings or loss by JWGCM or the Company for the two-month
period ended February 28, 1999. The final calculations of the
▇▇▇▇▇▇▇▇▇ Bonus will reflect the Company's actual net income, pre-tax,
for the above 1999 fiscal year period and will include amounts payable
to ▇▇▇▇▇▇▇▇▇ from future realized gains on sales of NITE stock,
payable within three (3) days of the Company's receipt of proceeds
from any such sale, based on 3% of the net sales proceeds per share
above $14.50 per share; with respect to any such NITE shares that have
not been sold within 30 days of the Company's ability to sell all such
shares without limitation as to volume pursuant to Rule 144 under the
Act, the Company upon request from ▇▇▇▇▇▇▇▇▇ will deliver to ▇▇▇▇▇▇▇▇▇
3% of such unsold shares.
4.3 TERMINATION OF ▇▇▇▇▇▇▇▇▇/LEEDS SHAREHOLDERS AGREEMENT; NEW
----------------------------------------------------------
VOTING AGREEMENT.
----------------
(a) On the Closing Date, that certain Agreement Among Certain
Shareholders between The ▇▇▇▇▇▇▇▇▇ Trust, ▇▇▇▇▇▇▇▇▇, and Leeds dated
as of June 12, 1998 ( the "Shareholders Agreement") shall terminate.
(b) Each member of the ▇▇▇▇▇▇▇▇▇ Group hereby agrees that, from
and after the Closing Date, with respect to any and all shares of
Common Stock owned by such person that were acquired in the
Combination (until such shares are sold pursuant to a registration
contemplated by Article 3 hereof or pursuant to Rule 144), such person
shall either (i) vote such shares in favor of the slate of nominees
for directors of the Company that is proposed by management of the
Company in any proxy solicitation undertaken in accordance with rules
and regulations of the Commission, or (ii) abstain from voting such
shares with respect to the election of directors of the Company.
(c) Weinstein, Stapleton, and each other ▇▇▇▇▇▇▇▇▇ Group Member
hereby agree that none of them shall seek election to the Board or
nominate any other person for election as a director of the Company
until the earlier of (i) ten (10) years following the Closing Date and
-22-
(ii) any date on which both Leeds and Marks are no longer members of
the Board. For purposes of this Section 4.3, the Board shall include
the governing body of any entity that might be a successor in interest
to the Company.
4.4 ▇▇▇▇▇▇▇▇▇ INSURANCE POLICIES.
----------------------------
(a) The Company and ▇▇▇▇▇▇▇▇▇ agree that the Company shall
transfer and assign to ▇▇▇▇▇▇▇▇▇ or his designee ownership of
successive portions of the ▇▇▇▇▇▇▇▇▇ Insurance Policies (each a
"Transferred Amount") on the basis of one-sixth (1/6) of the aggregate
face amount thereof on the fifteenth (15th) day of the first six
months beginning with the month after which the Closing Date falls.
With respect to any Transferred Amount, the Company shall include a
statement of when premiums are due and ▇▇▇▇▇▇▇▇▇ shall pay the premium
and other costs thereof accruing after the date of transfer; the
Company shall pay the premiums on all amounts not transferred.
(b) If ▇▇▇▇▇▇▇▇▇ fails, voluntarily or involuntarily, to pay the
portion of any premium for the ▇▇▇▇▇▇▇▇▇ Insurance Policies that he is
to pay under Section 4.4(a) within ten (10) days of the date due, then
the Company shall have the option of paying such portion of the
premium and maintaining the ▇▇▇▇▇▇▇▇▇ Insurance Policies in good
standing. The provisions of this Section 4.4(b) shall not apply if
▇▇▇▇▇▇▇▇▇'▇ failure to pay any premium is due to any waiver of
premiums by the issuing insurance company.
(c) If, as provided in Section 4.4(b), the Company elects to pay
any portion of the premium with respect to a Transferred Amount that
was payable but not paid by ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ hereby agrees, upon
written notice from the Company, to transfer and assign back to the
Company (and shall be deemed hereby to have done so) the portion of
the Transferred Amount with respect to which the Company has paid the
premium in place of ▇▇▇▇▇▇▇▇▇ (the "Transferred Back Amount").
Notwithstanding anything to the contrary contained elsewhere in this
Agreement, the Company shall not be required to transfer and assign to
▇▇▇▇▇▇▇▇▇, and ▇▇▇▇▇▇▇▇▇ shall not be entitled to receive from the
Company, any portion of any Transferred Back Amount.
(d) The occurrence of circumstances described in Section 4.4(b)
or (c) shall not excuse the Company from the duty to transfer and
assign to ▇▇▇▇▇▇▇▇▇ any Transferred Amounts (other than Transferred
Back Amounts) that are subsequently required to be transferred and
assigned to ▇▇▇▇▇▇▇▇▇ pursuant to Section 4.4(a).
(e) ▇▇▇▇▇▇▇▇▇ shall have the right to decline to receive the
assignment and transfer of any Transferred Amount (or portion thereof)
by giving written notice thereof to the Company at or prior to the
date on which the Company is to transfer and assign such Transferred
Amount to ▇▇▇▇▇▇▇▇▇. The exercise by ▇▇▇▇▇▇▇▇▇ of such right to
decline shall not excuse the Company from making subsequent transfers
and assignments to ▇▇▇▇▇▇▇▇▇ as provided in Section 4.4(a).
4.5 CONTINGENT INTEREST UPON BPS SALE. If more than ten (10%)
---------------------------------
percent of the JWGCM Equity Interests shall be sold by ▇▇▇▇▇▇▇▇▇ Group
-23-
Members (or if JWGCM shall sell all or substantially all of its
brokerage processing services ("BPS") business) to a third party, or
if any enforceable arrangement for any such sale shall be made, within
one (1) year of the Closing Date, then the Company shall be paid an
amount equal to forty percent (40%) of the net proceeds to the seller
above the baseline value ultimately paid upon the consummation of such
sale, which amount shall be paid to the Company at the same time that
any such consideration is paid to any other person in connection with
the transaction. For purposes of calculating "net proceeds to the
seller above the baseline value" in the preceding sentence, the
baseline value of all JWGCM Equity Interests or the BPS business, as
the case may be, shall be deemed to be the sum of (a) the market value
of the shares of Common Stock delivered by the ▇▇▇▇▇▇▇▇▇ Group
pursuant to Section 2.1, determined by reference to the AMEX closing
price on the Closing Date (or the immediately preceding trading date,
if the Closing Date is not a trading date) plus (b) the amount of any
change (positive or negative) in JWGCM's Members' Capital from the
Closing Date through the date of the applicable enforceable
arrangement. JWGCM and the ▇▇▇▇▇▇▇▇▇ Group agree to cause the Company
to be paid all amounts to which it becomes due pursuant to this
Section 4.5.
4.6 ADVENT SYSTEM AND RELATED SERVICES. From the Closing Date
----------------------------------
until September 30, 1999, JWGCM shall provide to the Company and its
affiliates portfolio management services using the so-called "ADVENT
System" that has been established by the Company in the San Francisco
offices of JWGCM; the fee for such services, payable monthly, shall be
$10,000 per month.
4.7 CONFIDENTIALITY AND NON-DISCLOSURE. The Company, Leeds, and
----------------------------------
Marks, on the one hand with respect to Confidential Information of
JWGCM and the ▇▇▇▇▇▇▇▇▇ Group and their affiliates, and the ▇▇▇▇▇▇▇▇▇
Group and JWGCM, on the other hand with respect to Confidential
Information of the Company and its affiliates, each agrees to keep
secret and confidential all the Confidential Information of the other
that has been or may be acquired in any manner up to and including the
Closing Date and not to disclose any such Confidential Information,
with the prior written consent of the other party, to any person,
except as may be required by law or by order of a court or other
regulatory authority of competent jurisdiction; provided that, after a
period of one (1) year following the Closing, any Confidential
Information that is not also a trade secret under applicable law shall
no longer be subject to the provisions of this Section 4.7.
4.8 NON-SOLICITATION AS TO CERTAIN ACTIVITIES. JWGCM,
-----------------------------------------
Stapleton, Weinstein, and the ▇▇▇▇▇▇▇▇▇ Trust agree that, from the
Closing Date until January 1, 2001, none of them (or any of their
employees or agents) will engage, directly or indirectly, whether
alone or together with any other person, including without limitation
as an officer, director, employee, consultant, advisor, partner or
other equity owner, investor, or agent, in any business that seeks to
solicit any existing client or customer of the Company or any of its
affiliates (or any prospective such client or customer to whom the
Company or an affiliate has made any proposal or presentation within
the past 12 months) with respect to the performance of any investment
banking, corporate finance, or other capital markets transaction or
services, other than brokerage services; PROVIDED, HOWEVER, that
neither (i) ownership as a passive investment of up to two percent
-24-
(2%) of the outstanding Capital Stock of an entity which class of
Capital Stock is listed for trading or quotation on The Nasdaq Stock
Market or a national or regional securities exchange that is
registered with the Commission nor (ii) general advertising and public
relations activities, shall be deemed to violate this Section 4.8.
Notwithstanding the foregoing, JWGCM and ▇▇▇▇▇▇▇▇▇ Group Members shall
not be prevented from providing any service to any person (or any
entity controlled by an affiliate of any such person) who is or has
been a long-standing client or customer (or an affiliate thereof) of
▇▇▇▇▇▇▇▇▇.
4.9 NO RECRUITMENT OF CERTAIN PERSONNEL. JWGCM and the
-----------------------------------
▇▇▇▇▇▇▇▇▇ Group, to the extent legally permissible under applicable
law, agree that, after the Closing Date until January 1, 2001, none of
them will (a) hire any of the Company personnel listed on Schedule 4.9
or (b) directly or indirectly, recruit or induce to leave the
employment of the Company or any of its affiliates, any person who, as
of the Closing Date, is an officer, other employee, or registered
representative of the Company or its affiliates.
4.10 NO DISPARAGEMENT. Each of the Company, Leeds, and Marks on
----------------
the one hand with respect to JWGCM, the ▇▇▇▇▇▇▇▇▇ Group, and their
respective affiliates, and each of JWGCM and the ▇▇▇▇▇▇▇▇▇ Group
Members on the other hand with respect to the Company, Leeds, Marks,
and their respective affiliates, agrees not to make or encourage
derogatory, disparaging, or other inflammatory comments about the
other party as relates to any matter associated with the Combination
or the relationship, course of dealings, or experiences of any party
with the other through and including the Closing Date; PROVIDED,
HOWEVER, that this Section 4.10 shall not be applicable in the context
of any legal proceeding instituted by a party in order to enforce any
right conferred by this Agreement.
4.11 INDEMNIFICATION. The Company hereby confirms that the
---------------
limitation on liability provided in its Articles of Incorporation for
the benefit of directors of the Company, and the indemnification
provided in its Bylaws for the benefit of directors or officers of the
Company or its affiliates, shall remain effective for the benefit of
▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇ with respect to their respective positions
with, or actions or inactions on behalf of, the Company and any of its
affiliates with whom ▇▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇▇▇ held a position or
performed any service between June 12, 1998 and the Closing Date
hereunder. In addition, from and after the Closing Date, the Company
shall indemnify and hold harmless, to the fullest extent permitted
under applicable law, each member of the ▇▇▇▇▇▇▇▇▇ Group, against all
losses, claims, damages, liabilities, costs or expenses (including
attorneys' fees), judgments, fines, penalties and amounts paid in
settlement in connection with any threatened or actual claim, action,
suit, or proceeding or investigation (whether civil, criminal or
administrative) arising out of or pertaining to any action that may be
taken against any ▇▇▇▇▇▇▇▇▇ Group Member by any other former owner of
JWGCM at the time of the Combination based on the consummation by
▇▇▇▇▇▇▇▇▇ Group Members of the arrangements provided for in this
Agreement.
-25-
ARTICLE 5
MUTUAL GENERAL RELEASES
-----------------------
5.1 RELEASES BY THE COMPANY. Each of the Company, Leeds, and
-----------------------
Marks, on behalf of itself or himself and all their respective
affiliates, hereby agrees that, from and after the Closing, it or he
shall be deemed to have fully released, remised, acquitted, and
forever discharged JWGCM, all members of the ▇▇▇▇▇▇▇▇▇ Group, and each
such person's respective assigns, predecessors, successors, affiliates
and allies, and all their respective officers, directors, trustees,
members, agents, attorneys, employees, and servants (but expressly
excluding any former owner of JWGCM who received shares of Common
Stock in the Combination but is not a ▇▇▇▇▇▇▇▇▇ Group Member)
(collectively, the "Company Released Parties"), from any and all
claims, suits, debts, covenants, agreements, promises, charges,
complaints, damages, losses, attorney's fees, and costs or expenses of
any kind whatsoever, whether at law or in equity, whether known or
unknown, that the Company, Leeds, or Marks, any predecessor or
successor in interest of the Company, Leeds, Marks, or any person or
entity affiliated with the Company, Leeds, Marks or any such other
person or entity, now has, ever had, or might conceive in the future
against any of the Company Released Parties arising out of, occurring
in connection with, or otherwise relating to the Combination, the acts
or omissions of such person with respect to the business, operations,
or affairs of the Company or its affiliates, or the employment or
other relationship of any such person with the Company or any of its
affiliates, from the beginning of the world up to and including the
Closing Date; PROVIDED, HOWEVER, that the Company, Leeds, and Marks
shall be entitled to take action to enforce its or his rights
conferred by the terms of this Agreement.
5.2 RELEASES BY THE ▇▇▇▇▇▇▇▇▇ GROUP, ET AL. Each of JWGCM and
---------------------------------------
the ▇▇▇▇▇▇▇▇▇ Group Members (each a "Releasing Member", and
collectively the "Releasing Members"), on behalf of itself and all its
affiliates, hereby agrees that, from and after the Closing, it shall
be deemed to have fully released, remised, acquitted, and forever
discharged the Company, Leeds, Marks, and each such person's
respective assigns, predecessors, successors, affiliates and allies,
and all their respective officers, directors, trustees, members,
agents, attorneys, employees, and servants (collectively, the "Member
Released Parties"), from any and all claims, suits, debts, covenants,
agreements, promises, charges, complaints, damages, losses, attorney's
fees, and costs or expenses of any kind whatsoever, whether at law or
in equity, whether known or unknown, that the Releasing Member, any
predecessor or successor in interest of the Releasing Member, or any
person or entity affiliated with the Releasing Member or any such
person or entity, now has, ever had, or might conceive in the future
against any of the Member Released Parties arising out of, occurring
in connection with, or otherwise relating to the Combination, the acts
or omissions of such person with respect to the business, operations,
or affairs of the Company or its affiliates, or the acts or omissions
of such person with respect to the employment or other relationship of
a Releasing Member with the Company or any of its affiliates, from the
beginning of the world up to and including the Closing Date; PROVIDED,
HOWEVER, that a Releasing Member shall be entitled to take action to
enforce its rights conferred by the terms of this Agreement. Without
limiting the generality of the foregoing, the ▇▇▇▇▇▇▇▇▇ Trust and
▇▇▇▇▇▇▇▇▇ shall withdraw with prejudice the ▇▇▇▇▇▇▇▇▇ Lawsuit and
-26-
shall cause a Stipulation of Dismissal With Prejudice to be filed with
the court in that action on the Regulatory Closing Date.
5.3 SPECIAL REMEDY FOR VIOLATION. If the Company, Leeds, or
----------------------------
Marks files any charge or complaint, institutes any lawsuit, or
initiates any action whatsoever, that is covered by the release in
Section 5.1, then the Company shall pay all of the attorneys' fees,
expenses, and costs incurred by any Company Released Party in
responding to the same, including but not limited to any consequential
damages any Company Released Party may suffer. If any Releasing
Member files any charge or complaint, institutes any lawsuit, or
initiates any action whatsoever, that is covered by the release in
Section 5.2, then such Releasing Member shall pay all of the
attorneys' fees, expenses, and costs incurred by any Member Released
Party in responding to the same, including but not limited to any
consequential damages any Member Released Party may suffer.
Notwithstanding the foregoing, no person shall be restricted or
limited in enforcing any of its rights conferred by this Agreement,
and the preceding two sentences shall not apply with respect to any
action taken that is reasonably necessary to such enforcement.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES
------------------------------
The several parties hereto acknowledge their respective
relationships with the other parties and their unique positions
relative to access to information about the other parties. Without
limiting the foregoing, the Company expressly acknowledges its access,
as parent of JWGCM, to full information about the operations and
financial condition of JWGCM; and ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇ each
acknowledges his access, as an officer and director of the Company, to
extensive information about the operations and financial condition of
the Company. Each party hereto acknowledges and agrees that, except
for agreements contained herein and the matters expressly stated
herein to be representations by another party (including those set
forth in Articles 2 and 3), such party is not relying on any
representations, statements, indications, or predictions by another
party in making the decision to enter into this Agreement and perform
its obligations hereunder. Within the context of such acknowledgments
and agreements, and the fundamental purpose and objective of this
Agreement to conciliate disputes and achieve certain disassociations
by the parties, the following limited additional representations are
made by certain of the parties.
6.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
---------------------------------------------
represents and warrants to the ▇▇▇▇▇▇▇▇▇ Group as follows:
(a) POWER AND AUTHORITY. The Company has all requisite power
and authority to execute, deliver, and perform this Agreement. The
execution, delivery, and performance by the Company of this Agreement
and any document contemplated hereby have been duly and validly
authorized by all requisite corporate action, and no other corporate
proceedings are necessary to authorize the execution, delivery, or
performance of this Agreement and such other documents. This
Agreement and the other documents to be executed by the Company
-27-
pursuant to this Agreement constitute, or upon execution and delivery
will constitute, the valid and binding obligations of the Company,
enforceable in accordance with their respective terms, except as the
same may be limited by general principles of equity, or bankruptcy,
insolvency, reorganization, or similar laws affecting the rights of
creditors generally.
(b) NONCONTRAVENTION. Neither the execution, performance, and
delivery of this Agreement or any document contemplated hereby, nor
the consummation of the transactions contemplated hereby or thereby,
will (a) violate any law or Governmental Requirement to which the
Company is subject or any provision of its Charter Documents, or (b)
result in a breach of, constitute a default under, or create in any
party the right to accelerate, terminate, or cancel, any indebtedness,
guaranty, contract, lease, license, franchise, permit, indenture, or
other agreement or other arrangement to which the Company is party or
by which any of the assets of the Company may be affected and that
would have a material adverse effect on the Company's ability to
perform its obligations under this Agreement or any document
contemplated hereby or to consummate the transactions contemplated
hereby or thereby.
(c) LITIGATION. There is no litigation pending or, to the
Company's knowledge, threatened against or affecting the Company at
law or in equity, or before or by any Governmental Authority, that has
a material adverse effect on the Company's ability to perform its
obligations under this Agreement or any document contemplated hereby
or to consummate the transactions contemplated hereby or thereby.
(d) GOVERNMENTAL CONSENT, ETC. No Governmental Approval is
required in connection with the execution, delivery, or performance
of this Agreement by the Company or the consummation by the Company of
any other transaction contemplated hereby, except for approvals that
may be necessary from securities law officials and the National
Association of Securities Dealers, Inc. (the "NASD") in connection
with the ownership change of JWGCM.
(e) POSSIBLE FUTURE TRANSACTIONS. The Company has had under
consideration from time to time matters that could, if consummated,
affect significantly the Company's financial condition, operating
results, prospects, and net worth. The only two (2) such matters that
are under active consideration have been disclosed to the ▇▇▇▇▇▇▇▇▇
Group, and they relate to discussions with a major institutional
investor about a possible financing and discussions with a major
securities brokerage clearing company concerning its purported
interest in purchasing the clearing services business of the Company's
subsidiary. No agreement exists for any such transaction, and none is
certain to be reached. Other transactions, presently unknown, could
develop in the future.
6.2 REPRESENTATIONS AND WARRANTIES AS TO JWGCM. The Company
------------------------------------------
hereby makes each of the representations contained in Section 6.1 with
respect to JWGCM, as of the date hereof and up to the Closing, to the
same extent that they are made in such Sections as to the Company,
except that each such representation excludes any matter or event that
arose or occurred prior to June 12, 1998. In addition, the Company
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further represents and warrants to the ▇▇▇▇▇▇▇▇▇ Group with respect to
JWGCM, but only to the extent of matters or events arising or that
occurred after June 12, 1998, as follows:
(a) RIGHTS TO ACQUIRE JWGCM EQUITY INTERESTS. There are no
outstanding options, warrants, rights, calls, commitments, conversion
rights, plans, or other agreements or arrangements of any character
providing for the purchase or issuance of any additional JWGCM Equity
Interests.
(b) ABSENCE OF UNDISCLOSED LIABILITIES. Except as fully
reflected in the financial statements of JWGCM made available to the
▇▇▇▇▇▇▇▇▇ Group, as set forth in Schedule 6.2(b), or as is actually
known to ▇▇▇▇▇▇▇▇▇, the Company has no actual knowledge that JWGCM has
any debt, liability, or obligation of any kind (whether accrued,
absolute, contingent, or otherwise) including without limitation any
liability or obligation on account of taxes or any governmental
charge, penalty, interest, or fine, or any "loss contingencies"
considered "probable" or "reasonably possible" within the meaning of
the Financial Accounting Standards Board's Statement of Financial
Accounting Standards No. 5, except (i) liabilities incurred in the
ordinary course of business since the date of such financial
statements, (ii) liabilities incurred in connection with the
transactions provided for in this Agreement, and (iii) liabilities to
the extent caused by events or circumstances occurring prior to the
Combination.
(c) NOTES AND ACCOUNTS RECEIVABLE. Except as set forth on
Schedule 6.2(c), to the actual knowledge of the Company, all
receivables reflected in the financial statements of JWGCM furnished
to the ▇▇▇▇▇▇▇▇▇ Group, as set forth in Schedule 6.2(b) (net of
reserves stated therein), were, and all such receivables held by JWGCM
on the date hereof are, valid obligations of the makers thereof.
Except as is actually known to ▇▇▇▇▇▇▇▇▇, the Company has no actual
knowledge that JWGCM has received any notice from any of the makers of
such receivables of any alleged offsets or counterclaims, nor does
JWGCM have any reason to believe that any of such receivables are not
collectible. The Company has no reason to believe that future
experiences of JWGCM with respect to the amount of allowances for
uncollectible receivables will vary materially and adversely from the
amount of such allowances reflected in such financial statements.
(d) LITIGATION; COMPLIANCE WITH LAWS GENERALLY. Except as set
forth on Schedule 6.2(d), or as is actually known to ▇▇▇▇▇▇▇▇▇, the
Company has no actual knowledge that (i) any litigation is pending or
overtly threatened against, by, or affecting JWGCM that might have a
material adverse effect on JWGCM; (ii) JWGCM has been charged with, or
is under investigation with respect to, any charge concerning any
violation of any Governmental Requirement in respect to its business;
and (iii) there are any judgments unsatisfied against JWGCM, and no
consent decrees to which JWGCM is subject. To the actual knowledge of
the Company, (i) JWGCM is in compliance with all applicable
Governmental Requirements, except where the failure to so comply does
not and will not have a material adverse effect on JWGCM or the
▇▇▇▇▇▇▇▇▇ Group following the Closing Date.
-26-
(e) TAX MATTERS. Except as set forth in Schedule 6.2(e): for
federal, state and local income tax purposes, JWGCM is a "Partnership"
as defined in Section 7701 of the Internal Revenue Code of 1986, as
amended. To the actual knowledge of the Company, (i) all Returns
required to be filed since June 12, 1998 with respect to any Tax for
which JWGCM is liable have been duly and timely filed with the
appropriate Taxing Authority, (ii) all such Returns were correct and
complete in all material respects, and each Tax shown to be payable on
each such Return has been paid, (iii) each Tax payable by JWGCM by
assessment since June 12, 1998 has been timely paid in the amount
assessed, and adequate reserves have been established on the
consolidated books of JWGCM for all Taxes for which JWGCM is liable,
but the payment of which is not yet due, (iv) JWGCM is not and has not
been since June 12, 1998 liable for any Tax payable by reason of the
income or property of a person other than JWGCM or a JWGCM subsidiary,
(v) there are no requests for rulings or determinations in respect of
any taxes pending between JWGCM and any Taxing Authority, (vi) no
extension of any period during which any Tax may be assessed or
collected and for which JWGCM is or may be liable has been granted to
any Taxing Authority, (vii) neither JWGCM not any JWGCM subsidiary is
or has been a party to any tax allocation or sharing agreement,
(viii) all amounts required to be withheld by JWGCM and paid to
governmental agencies for income, social security, unemployment
insurance, sales, excise, use and other Taxes have been collected or
withheld and paid to the proper Taxing Authority, and (ix) JWGCM has
made all deposits required by law to be made with respect to
employees' withholding and other employment taxes.
(f) ABSENCE OF CHANGES. To the actual knowledge of the Company,
since June 13, 1998, except as set forth in Schedule 6.2(f) or other
Schedules furnished pursuant to this Section 6.2, or as actually known
by ▇▇▇▇▇▇▇▇▇, none of the following has occurred with respect to
JWGCM: (i) any circumstance, condition, event, or state of facts
(either singularly or in the aggregate), other than conditions
affecting the business of JWGCM in general, that has caused, is
causing, or will cause a material adverse effect on JWGCM; (ii) any
increase in, or any commitment or promise to increase, the rate of
compensation, or the amounts or other benefits paid or payable under
any benefit plan or other compensation plan; (iii) any work
interruptions, labor grievances or claims filed, or any similar event
or condition of any character, that will, or could reasonably expect
to, have a material adverse effect on JWGCM; (iv) any commitment of
JWGCM to distribute, sell, or transfer, any of its assets or
properties of any kind that singularly is, or in the aggregate are,
material to JWGCM, other than distributions, sales, or transfers in
the ordinary course of its business and consistent with its past
practices; (v) any plan, agreement or arrangement granting any
preferential rights to purchase or acquire any interest in any of its
assets, property, or rights or requiring consent of any person to the
transfer and assignment of any such assets, property, or rights; (vi)
any waiver of any of its rights or claims that singularly is, or in
the aggregate are, material to JWGCM; or (vii) any cancellation or
termination of a material agreement of JWGCM.
(g) BROKER-DEALER REGISTRATION; ETC. JWGCM is registered as a
broker-dealer with the Commission and the Commissioner of Corporations
of the California Department of Corporations, and is a member in good
standing of the NASD. To the actual knowledge of the Company, JWGCM
-30-
has filed all Form BDs and Form ADVs (including all amendments
thereto) required to be filed with the Commission since June 12, 1998,
each of which has complied with the Exchange Act or the Investment
Advisers Act of 1940, as amended, as the case may be, each as in
effect on the date so filed. To the actual knowledge of the Company,
none of such Form BDs or Form ADVs contained, when filed, any untrue
statement of material fact required to be stated or incorporated by
reference therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
Except to the extent amended or superseded by a subsequent filing with
the Commission (a copy of which has been provided to ▇▇▇▇▇▇▇▇▇ prior
to the date hereof), to the actual knowledge of the Company, none of
the Form BDs or Form ADVs (including all amendments thereto) contains
any untrue statement of a material fact required to be stated or
incorporated by reference therein or necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading. To the actual knowledge of the Company,
all copies of such Form BDs and Form ADVs (including all amendments
thereto) required to be filed with any state have been filed in a
timely manner. To the actual knowledge of the Company, JWGCM has
filed all SRO Reports required to be filed with any self-regulatory
organizations since June 12, 1998, each of which has complied with the
rules of the self-regulatory organization, each as in effect on the
date so filed, and none of the SRO Reports contained, when filed, any
untrue statement of material fact required to be stated or
incorporated by reference therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Except to the extent revised or superseded by a
subsequent filing with the self-regulatory organization (a copy of
which has been provided to JWGCM prior to the date hereof), to the
actual knowledge of the Company, none of the SRO Reports contains any
untrue statement of a material fact or omits to state a material fact
required to be stated or incorporated by reference therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. JWGCM has
registered as a broker-dealer and investment adviser in each
jurisdiction in which such registration has been required since June
12, 1998. To the actual knowledge of the Company, JWGCM has filed or
caused to be filed all forms, reports, statements, and documents
(including all Form U-4s on behalf of registered representatives)
required to be filed with nay state since June 12, 1998, and all such
forms, reports, statements, and documents are accurate in all material
respects.
(h) JWGCM CHARTER DOCUMENTS. Other than to change the legal
name of JWGCM and to reflect the Company's ownership of the JWGCM
Equity Interests and related matters that are contained in the Second
Amendment to the Operating Agreement of JWGCM that has been disclosed
to the ▇▇▇▇▇▇▇▇▇ Group, the Company has no actual knowledge of any
modification of or other change to any Charter Document of JWGCM.
(i) JWGCM EMPLOYEE BENEFIT PLANS. The Employee Benefit Plans of
JWGCM consists solely of the Employee Benefit Plans in existence on
June 12, 1998, although JWGCM personnel are presently eligible to
participate in the Company's Employee Stock Purchase Plan, which
eligibility shall be terminated as a result of the stock exchange
required by Section 2.1.
-31-
6.3 REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇▇▇▇▇▇ GROUP MEMBERS.
---------------------------------------------------------
Each ▇▇▇▇▇▇▇▇▇ Group Member, severally and not jointly, represents and
warrants to the Company, Leeds, and Marks as follows:
(a) POWER AND AUTHORITY. Such ▇▇▇▇▇▇▇▇▇ Group Member has all
requisite power and authority to execute, deliver, and perform this
Agreement. This Agreement and any document to be executed by the
▇▇▇▇▇▇▇▇▇ Group Member pursuant to this Agreement constitute, or upon
execution and delivery will constitute, the valid and binding
obligation of the ▇▇▇▇▇▇▇▇▇ Group Member, enforceable in accordance
with its respective terms, except as the same may be limited by
general principles of equity, or bankruptcy, insolvency,
reorganization, or similar laws affecting the rights of creditors
generally.
(b) INVESTMENT REPRESENTATIONS. The ▇▇▇▇▇▇▇▇▇ Group Member (i)
will be acquiring its portion of the JWGCM Equity Interests to be
issued pursuant to Section 2.1 to the Member solely for such ▇▇▇▇▇▇▇▇▇
Group Member's account, for investment purposes only and with no
current intention or plan to distribute, sell, or otherwise dispose of
any portion thereof in connection with any distribution that is not
made pursuant to an appropriate registration statement or in
accordance with an applicable exemption promulgated under the
Securities Act and any applicable state securities law; (ii) is an
"accredited investor" as defined in Rule 501(a) under the Securities
Act; and (iii) (A) is able to bear the economic risks of the
investment in JWGCM that it will be making as a result of performing
pursuant to this Agreement, (B) can afford to sustain a total loss of
that investment, (C) has such knowledge and experience in financial
and business matters that the ▇▇▇▇▇▇▇▇▇ Group Member is capable of
evaluating the merits and risks of the investment, (D) has had an
adequate opportunity to ask questions and has received the answers
from the officers of JWGCM and the Company concerning any and all
matters relating to the transactions contemplated hereby, including
the plans for the operations of the business of JWGCM and the status
of the business, operations, and financial condition of JWGCM and the
Company, and (E) has asked all questions that the ▇▇▇▇▇▇▇▇▇ Group
Member has of the nature described in preceding clause (D), and all
those questions have been answered to such ▇▇▇▇▇▇▇▇▇ Group Member's
satisfaction.
ARTICLE 7
GENERAL AND MISCELLANEOUS
-------------------------
7.1 TERMINATION. This Agreement may be terminated prior to the
-----------
Closing by the written mutual consent of ▇▇▇▇▇▇▇▇▇ acting on behalf of
the ▇▇▇▇▇▇▇▇▇ Group, on the one hand, and the Company, on the other
hand. If the Closing has not occurred by March 8, 1999 (or such later
date to which it might have been extended by mutual consent of
▇▇▇▇▇▇▇▇▇ and the Company), then this Agreement may be terminated by
written notice of ▇▇▇▇▇▇▇▇▇ or the Company to the other. If
Regulatory Approvals for the Equity Exchange have not been obtained by
April 15, 1999, then the consequences set forth in Section 2.1(c)
shall become effective without further action by any party. The
-32-
parties hereby confirm, however, their intention to consummate the
Closing, except for the Equity Exchange that is subject to obtaining
the Regulatory Approvals, as of March 3, 1999, and to obtain the
Regulatory Approvals by March 31, 1999.
7.2 WRONGFUL REFUSAL TO CLOSE; SPECIFIC ENFORCEMENT. The
-----------------------------------------------
parties expressly intend for this Agreement to be specifically
enforceable, and each party hereby agrees that any party who has
performed (or is performing) its obligations hereunder in the manner
and on the scheduled contemplated hereby may initiate a lawsuit or any
other proceeding in order to obtain specific performance by any party
of its obligations hereunder. Without limiting the foregoing, the
parties further agree that, in addition to the remedy of specific
performance, if any party shall wrongfully refuse to perform any of
its obligations hereunder that are required in order for the Closing
to occur, so that an action to obtain specific performance or any
other remedy shall become necessary, such defaulting party shall pay
as additional damages the greater of (a) $250,000 and (b) the amount
of all costs or expenses incurred by any other party or parties to
enforce this Agreement. If the defaulting party is the Company,
Leeds, or Marks, the payment shall be made to the ▇▇▇▇▇▇▇▇▇ Group; if
the defaulting party is a ▇▇▇▇▇▇▇▇▇ Group Member, the payment shall be
made to the Company. The parties agree that the foregoing amounts are
not intended to be a measure of, an agreement as to, or a limit on the
actual amount of, damages that any party may have incurred or be
entitled to recover as a result of a wrongful failure by any party to
perform its obligations hereunder.
7.3 NOTICES, ETC. All notices, consents, requests, and demands
-------------
to or upon the respective parties hereto to be effective shall be in
writing and, unless otherwise expressly provided herein, shall be
deemed to have been duly given or made (i) on the date delivered in
person, (ii) on the date indicated on the return receipt if mailed
postage prepaid, by certified or registered U.S. Mail, with return
receipt requested, (iii) on the date transmitted by facsimile, if
completely sent by 5:00 P.M., Eastern Time, and confirmation of
receipt thereof is reflected or obtained, or (iv) IF sent by Federal
Express or other nationally recognized over night courier service or
overnight express U.S. Mail, with service charges or postage prepaid,
THEN on the next business day after delivery to the courier service or
U.S. Mail (in time for and specifying next day delivery). In each
case (except for personal delivery) such notices, requests, demands,
and other communications shall be sent to a party at its address or
facsimile number as follows, or as otherwise designated by the party
by notice in accordance herewith:
(a) If to the Company, Leeds, or Marks:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Chairman
and Chief Executive Officer
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
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With a copy to:
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇
Attention: W. ▇▇▇▇▇ ▇▇▇▇▇, Esq.
Facsimile No.: 404-815-6555
(b) If to JWGCM or any ▇▇▇▇▇▇▇▇▇ Group Member:
c/o ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to:
Will ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
and
---
Altheimer & ▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
7.4 ENTIRE AGREEMENT. This Agreement, including the Annexes and
----------------
Schedules hereto, supersedes all prior discussions, understandings,
term sheets, and agreements of any sort by and among the parties
hereto with respect to the matters contained herein or contemplated
hereby, and this Agreement constitutes the sole and entire agreement
by and among the parties hereto with respect to the transactions
contemplated herein.
7.5 AMENDMENTS; MODIFICATIONS; WAIVERS. This Agreement may be
----------------------------------
amended or modified only by an instrument in writing executed by the
party against whom enforcement of the amendment or modification is
sought.
7.6 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.
-34-
7.7 GOVERNING LAW. This Agreement is made under, and shall be
-------------
governed by and construed and enforced in accordance with, the
substantive laws of the State of Florida without regard to the
conflict of interests provisions thereto.
7.8 FURTHER ASSURANCES. Each party hereby agrees that it will,
------------------
from time to time, whether before or after the Closing, at any other
party's reasonable and good faith request and without further
consideration, execute and deliver such further and other transfers,
assignments and documents and do all matters and things that may be
necessary or convenient to more effectively and completely carry out
the intentions of this Agreement.
7.9 TIME. Time is of the essence in the performance of this
----
Agreement in all respects.
7.10 RESTRICTION ON TRADING. ▇▇▇▇▇▇▇▇▇ Group Members agree that
----------------------
they will not trade (or cause or encourage any third party to trade)
in the Common Stock (or securities convertible into or exercisable for
shares of Common Stock), while in possession of any material non-
public information concerning the Company. In this regard, the
parties acknowledge their respective rights and obligations set forth
in Sections 3.1 through 3.7 of this Agreement.
7.11 PRESS RELEASES AND ANNOUNCEMENTS. No press release related
--------------------------------
to this Agreement or the transactions contemplated herein, or other
announcement to the personnel, customers, or clients of any party,
will be issued or made without the approval of the Company, which
shall not be unreasonably withheld. With respect to any press release
or announcement by the Company, the Company shall provide ▇▇▇▇▇▇▇▇▇,
on behalf of the ▇▇▇▇▇▇▇▇▇ Group, with at least 48 hours' written
notice thereof and the opportunity, during such period, to provide
comments and suggestions with respect thereto, which the Company will
reasonably consider for inclusion or reflection in any such press
release. Any such matter shall be consistent with the parties'
respective obligations under Section 4.7 and 4.10 hereof.
7.12 EXPENSES. Except as otherwise expressly provided herein,
--------
each party will pay all of its expenses, including attorneys' fees, in
connection with the negotiation of this Agreement, the performance of
its obligations hereunder, and the consummation of the matters
contemplated by this Agreement.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized officers and their corporate seals
to be affixed, all as of the day and year first above written.
(CORPORATE SEAL) "COMPANY"
JWGENESIS FINANCIAL CORP.
Attest:
________________________________ By:______________________________
Secretary or Assistant Secretary ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Chairman
and Chief Executive Officer
(SEAL) "JWGCM"
JWGENESIS CAPITAL MARKETS, LLC
By:________________________________
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Chairman
THE WILL ▇. ▇▇▇▇▇▇▇▇▇ REVOCABLE TRUST
UNDER TRUST AGREEMENT DATED FEBRUARY
27, 1990
By:________________________________
WILL ▇. ▇▇▇▇▇▇▇▇▇, TRUSTEE
_______________________________(Seal)
WILL ▇. ▇▇▇▇▇▇▇▇▇
_______________________________(Seal)
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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_______________________________(Seal)
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
_______________________________(Seal)
▇▇▇▇ ▇. ▇▇▇▇▇
OTHER "▇▇▇▇▇▇▇▇▇ GROUP MEMBERS"
SZRL INVESTMENTS, AN ILLINOIS PARTNERSHIP
By: ▇▇▇▇▇▇ ▇▇▇▇ Revocable Trust
established Under Trust Agreement
dated January 17, 1990, General
Partner
By:_________________________________
▇▇▇▇▇▇ ▇▇▇▇, Trustee
By: ▇▇▇▇▇▇ ▇. and ▇▇▇ ▇▇▇▇▇ Trust
established Under Trust Agreement
establishing The ▇▇▇▇▇▇ ▇▇▇▇▇
Revocable Trust dated December 1989,
General Partner
By:_________________________________
▇▇▇▇ ▇▇▇▇▇▇, Trustee
JB CAPITAL MANAGEMENT, INC.
By:_______________________________________
▇▇▇▇▇▇ ▇. Puck, Chief Financial Officer
-37-
ANNEX A
FORMULA FOR CALCULATING UNEXCUSED DELAY PAYMENTS
If the Registration Statement shall not have been filed by the
Company on or before the Filing Date prescribed in Section 3.1, OR if
the Registration Statement shall not have been declared effective by
the Commission on or before the Registration Deadline, OR after the
Effective Date, if the Registration Statement shall be unavailable for
use by ▇▇▇▇▇▇▇▇▇, the ▇▇▇▇▇▇▇▇▇ Trust, or other members of the
▇▇▇▇▇▇▇▇▇ Group for any reason other than a Material Disclosable
Development as permitted pursuant to Section 3.4 (each such date being
called a "Payment Measuring Date"), THEN in any such event as
applicable, the Company shall be required to pay to ▇▇▇▇▇▇▇▇▇, the
▇▇▇▇▇▇▇▇▇ Trust, and each other member of the ▇▇▇▇▇▇▇▇▇ Group (the
latter only with respect to an event triggered by clause (iv) of
Section 3.3) with respect to any unsold Registrable Securities held by
such person on the applicable Payment Measuring Date that were being
covered by the Registration Statement, an amount equal to the
difference between (a) the average of the closing sales prices of the
Common Stock during the twenty (20) consecutive trading day period
immediately preceding the Payment Measuring Date MINUS (b) the average
of the closing sales prices of the Common Stock for the twenty (20)
consecutive trading day period immediately preceding the date on which
the event giving rise to such Payment Measuring Date is cured -- i.e.,
the Registration Statement is filed, the Registration Statement is
declared effective, or the Registration Statement is again available
for use by members of the ▇▇▇▇▇▇▇▇▇ Group to offer and sell their
Registrable Securities, as the case may be. The aggregate maximum in
Unexcused Delay Payments to ▇▇▇▇▇▇▇▇▇ and the ▇▇▇▇▇▇▇▇▇ Trust with
respect to all delays for which Unexcused Delay Payments are due
pursuant to any of Sections 3.3(i), (ii) and (iii), shall be $600,000,
and the aggregate maximum in Unexcused Delay Payments to all members
of the ▇▇▇▇▇▇▇▇▇ Group with respect to any single delay for which
Unexcused Delay Payments are due pursuant to Section 3.3(iv) shall be
$100,000.
In making any calculation of Unexcused Delay Payments due to any
member of the ▇▇▇▇▇▇▇▇▇ Group, appropriate adjustments shall be made
to account for and reflect any dividend or similar distribution paid
on the Common Stock as a class, whether in cash or shares of Capital
Stock, or any stock split, reverse stock split, or other
recapitalization transaction, effected after the Closing Date.
SCHEDULE 2.3(d)
ITEMS OF JWGCM PROPERTY TO BE
TRANSFERRED TO THE COMPANY
1. Video Conferencing Equipment
2. ADVENT System hardware and related equipment that were
placed in the San Francisco office by the Company after the
Combination.
3. All machinery, equipment, computers, computer software (and
any improvements thereof), office equipment, vehicles, furniture,
fixtures, leasehold improvements, and other tangible personal property
used in the operation of the corporate finance and other capital
markets business, including, without limitation, all such items
located at the office located at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇.
* * * * * *
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SCHEDULE 2.3(f)
JWGCM PERSONNEL TO BE TRANSFERRED
---------------------------------
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ Justynsky
* * * * * *
-40-
SCHEDULE 4.9
COMPANY PERSONNEL SUBJECT TO NO HIRE
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
* * * * * *
SCHEDULE 6.2(b)
ABSENCE OF JWGCM UNDISCLOSED LIABILITIES
----------------------------------------
NONE
* * * * * *
SCHEDULE 6.2(c)
JWGCM NOTES AND ACCOUNTS RECEIVABLE
-----------------------------------
NONE
* * * * * *
SCHEDULE 6.2(d)
JWGCM LITIGATION AND COMPLIANCE WITH LAWS GENERALLY
---------------------------------------------------
NONE
* * * * * *
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SCHEDULE 6.2(e)
JWGCM TAX MATTERS
NONE
* * * * * *
SCHEDULE 6.2(f)
ABSENCE OF CHANGES TO JWGCM
NONE
* * * * * *
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