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MERGER AGREEMENT
by and among
Xxxxxxxxxxx.xxx, Inc.,
and
Wealthhound Securities, Inc.,
on the one hand,
and
WAP, Inc.
and
Wolf X. Xxxxxx,
on the other hand
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August 29, 2000
Table of Contents
ARTICLE I PURCHASE OF SHARES.................................................1
Section 1.1 Purchase and Sale.......................................1
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ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SHAREHOLDER..4
Section 2.1 Organization of the Company.............................4
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Section 2.2 Authorization...........................................4
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Section 2.3 Capitalization; Shares; Title...........................5
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Section 2.4 No Violations...........................................5
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Section 2.5 Governmental Consents...................................6
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Section 2.6 Litigation..............................................6
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Section 2.7 Compliance with Law; Permits............................6
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Section 2.8 Financial Statements; Nondisclosed Liabilities..........7
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Section 2.9 Improper Payments.......................................7
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Section 2.10 Contracts...............................................8
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Section 2.11 Investment Contracts, Funds and Clients.................8
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Section 2.12 Agreements with Regulatory Agencies.....................9
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Section 2.13 Interest Rate Risk Management Instruments...............9
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Section 2.14 Insurance...............................................9
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Section 2.15 Bank Accounts...........................................9
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Section 2.16 Full Disclosure........................................10
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Section 2.17 No Convictions, Injunctions, etc., against Registered
Representatives........................................10
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Section 2.18 Brokers and Finders....................................10
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Section 2.19 Independent Counsel....................................10
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ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND SECURITIES..........10
Section 3.1 Organization of Parent and Securities..................10
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Section 3.2 Authorization of Parent and Securities.................11
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Section 3.3 No Violations..........................................11
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Section 3.4 Governmental Consents..................................12
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Section 3.5 Brokers and Finders....................................12
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ARTICLE IV GENERAL COVENANTS.................................................12
Section 4.1 Conduct of Business of the Company Pending the Closing.12
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Section 4.2 Investigation..........................................12
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Section 4.3 Commercially Reasonable Efforts; Agreement to Cooperate;
Further Assurances.....................................13
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Section 4.3 Commercially Reasonable Efforts; Agreement to Cooperate;
Further Assurances......................................13
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Section 4.4 No Public Announcement..................................13
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Section 4.5 Notice of Developments..................................13
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Section 4.6 Expenses; Transfer and Similar Taxes....................14
------------------------------------
Section 4.7 Application for NASD Approval...........................14
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Section 4.8 Shareholder Consulting Agreement........................14
--------------------------------
Section 4.9 Restrictions on Resale..................................14
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ARTICLE V CONDITIONS TO THE CLOSINGS..........................................14
Section 5.1 Conditions to the Obligations of Parent and Securities..14
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Section 5.2 Conditions to the Obligation of the Company and the
Shareholder.............................................16
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ARTICLE VI TERMINATION........................................................16
Section 6.1 Termination.............................................16
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Section 6.2 Effect of Termination...................................17
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ARTICLE VII INDEMNIFICATION...................................................17
Section 7.1 Indemnification by the Company and the Shareholder......17
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Section 7.2 Indemnification by Parent and Securities................18
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Section 7.3 Indemnification Procedures..............................18
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Section 7.4 Exclusive Remedy........................................18
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ARTICLE VIII MISCELLANEOUS 20
Section 8.1 Amendment, Modification and Waiver......................20
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Section 8.2 Entire Agreement........................................20
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Section 8.3 Notices.................................................20
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Section 8.4 Governing Law and Jurisdiction..........................20
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Section 8.5 Headings................................................21
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Section 8.6 Assignment; Binding Agreement...........................21
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Section 8.7 Third Party Beneficiaries...............................21
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Section 8.8 Specific Performance....................................21
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Section 8.9 Severability............................................21
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Section 8.10 Counterparts............................................21
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List of Schedules
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Schedule 2.5 Governmental Consents
Schedule 2.10 Contracts
Schedule 2.11(e Exemptive Orders
Schedule 2.12 Agreements with Regulatory Agencies
Schedule 2.14 Insurance
Schedule 2.15 Bank Accounts
Schedule 2.17 Registered Representatives
iii
List of Exhibits
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Exhibit 2.8(b).........Most Recent Financial Statements
Delivered to the NASD
iv
MERGER AGREEMENT
MERGER AGREEMENT ("Agreement"), dated as of August 29, 2000,
by and among, Xxxxxxxxxxx.xxx, Inc., a Florida corporation ("Parent"), and
Wealthhound Securities, Inc., a Delaware corporation ("Securities"), on the one
hand, and WAP, Inc., a New York corporation (the "Company"), and Wolf X. Xxxxxx,
an individual (the "Shareholder"), on the other hand.
W I T N E S S E T H:
--------------------
WHEREAS, the Company was incorporated on February 8, 2000 (the
"Incorporation Date") to engage in the broker/dealer business (the "Business")
and the Shareholder owns all of the issued and outstanding shares of the
Company's common stock, no par value (the "Shares");
WHEREAS, 100 shares of the Company's common stock, no par
value, are issued, outstanding and owned of record and beneficially by the
Shareholder;
WHEREAS, Parent, Securities, the Company and the Shareholder
desire that Securities merge with and into the Company (the "Merger"), upon the
terms and conditions set forth herein and in accordance with the General
Corporation Law of the State of Delaware (the "Delaware GCL") with the result
that the Company shall continue as the surviving corporation and the separate
existence of Securities (except as it may be continued by operation of law)
shall cease;
WHEREAS, Parent, Securities and the Company desire that upon
the Merger, at the Effective Date (as hereinafter defined), all outstanding
shares of the capital stock of the Company immediately prior to the Effective
Date be converted into the immediate right (as of the Effective Date (as
hereafter defined)) to receive 100,000 shares of common stock, $.01 par value,
of Parent (the "Common Stock"); and
WHEREAS, Parent, Securities, the Company and the Shareholder
intend that the merger of Securities with and into the Company qualify as a
tax-free reorganization pursuant to Section 368(a) and 368(a)(2)(e) of the
Internal Revenue Code of 1986, as amended (the "Code").
NOW THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants, agreements and conditions set
forth herein, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto, intending to be legally bound hereby, agree as follows:
ARTICLE I
PLAN OF REORGANIZATION
Section 1.1 Plan of Reorganization.
----------------------
1. The Merger.
1.1 The Merger. Subject to the terms and conditions of this
Agreement, at the Effective Date, in accordance with this Agreement and the
Delaware GCL, Securities shall be merged with and into the Company, the separate
existence of Securities (except as it may be continued by operation of law)
shall cease, and the Company shall continue as the surviving corporation.
1.2 Effect of the Merger. The Merger shall have the effects
set forth in Section 259 of the Delaware GCL. Without limitation to generality
of the foregoing, and subject thereto, at the Effective Date, all the
properties, rights, privileges, powers and franchises of the Constituent
Corporations shall vest in the Surviving Corporation and all debts, liabilities
and duties of the Constituent Corporations shall become the debts, liabilities
and duties of the Surviving Corporation.
1.3 Consummation of the Merger. The Merger shall become
effective upon the filing with (a) the Secretary of State of the State of
Delaware of a properly executed Certificate of Merger (the "Delaware Certificate
of Merger") and (b) the Secretary of State of the State of New York of a
properly executed Certificate of Merger (the "New York Certificate of Merger")
in each case on the Closing Date (as hereinafter defined)(the date of such
filings being the "Effective Date").
1.4 Charter; Bylaws; Directors and Officers. The Certificate
of Incorporation of the Surviving Corporation from and after the Effective Date
shall be the Certificate of Incorporation of Securities until thereafter amended
in accordance with the provisions thereof and as provided by the Delaware GCL.
The Bylaws of the Surviving Corporation from and after the Effective Date shall
be the Bylaws of Securities as in effect immediately prior to the Effective
Date, continuing until thereafter amended in accordance with the provisions
thereof and the Certificate of Incorporation of the Surviving Corporation and as
provided by the Delaware GCL. The initial directors and officers of the
Surviving Corporation shall be the directors and officers, respectively, of
Securities immediately prior to the Effective Date, in each case until their
respective successors are duly elected and qualified.
1.5 Tax Consequences. It is intended that the Merger shall
constitute a tax- free reorganization described in Section 368(a) and
368(a)(2)(e) of the Code, and that this Agreement shall constitute a "plan of
reorganization" for the purposes of Section 368 of the Code. The parties shall
treat the transactions contemplated hereby consistently with such intention.
1.6 The Closing. The consummation of the Merger and the other
transactions contemplated by this agreement (the "Closing") shall take place at
the offices of counsel to Parent and Securities, Xxxxxx Xxxxxx LLP at The
Chrysler Building, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 10:00
a.m., local time, as soon as practicable after the conditions
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to close set forth in Section 5 have been satisfied or waived which is
anticipated to be on or before September 29, 2000 or at such other date, time or
place as may be agreed to in writing by the parties hereto (the "Closing Date").
1.7 Further Assurances. On and after the Effective Date, the
Shareholder will from time to time, at the Surviving Corporation's request,
promptly execute such instruments and take such other actions as the Surviving
Corporation may reasonably request to vest, perform or confirm, of record or
otherwise, in the Surviving Corporation, its rights, title or interest in, to or
under any of the rights, privileges, powers, franchises, properties or assets of
the Company, or otherwise to evidence or implement the transactions contemplated
by this agreement.
2. Conversion and Exchange of Shares.
---------------------------------
2.1 Conversion and Exchange of Shares. By virtue of the Merger
and without any action on the part of the holders of capital stock of the
Company, at the Effective Date all outstanding shares of capital stock of the
Company shall be converted into an immediate right to receive 100,000 shares of
Parent Common Stock (collectively, the "Merger Consideration"), and each share
of Company Common Stock issued and outstanding immediately prior to the
Effective Date shall be converted immediately into the right to receive 1,000
shares of Parent Common Stock.
2.2 Stock Option, Warrants, Etc. At the Effective Date, each
outstanding stock option, warrant or other right to purchase any capital stock
of the Company shall, whether or not then exercisable or vested, be canceled and
no capital stock of Parent or Securities, cash or other consideration shall be
paid or delivered in exchange therefor.
2.3 Surrender and Exchange of Shares; Payment of Merger
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Consideration
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(a) At the Effective Date, each holder of an outstanding
certificate or certificates, which prior thereto represented shares of Company
Common Stock, shall surrender the same to Securities or its agent, and each such
holder shall be entitled upon such surrender to receive in exchange therefor,
without cost to it, the number of shares of Parent Common Stock into which the
shares of Company Common Stock, theretofore represented by the certificate or
certificates so surrendered shall have been converted as provided in Section 2.1
hereof, and the certificate or certificates so surrendered in exchange for such
consideration shall forthwith be canceled by Securities.
(b) At the Effective Date, upon the surrender for
cancellation of the certificates representing all the outstanding shares of the
capital stock of the Company pursuant to paragraph (a) above.
(c) Parent shall deliver to the holders of Company Common
Stock an aggregate of 100,000 shares of issued and outstanding Parent Common
Stock represented by a
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stock certificate registered in the name of the Shareholder evidencing
said shares of Common Stock.
2.4 Closing of Stock Transfer Books. On and after the
Effective Date there shall be no transfers on the stock transfer books of Parent
or Securities of shares of capital stock of the Company that were issued and
outstanding immediately prior to the Effective Date.
2.5 Fractional Shares. No scrip or fractional shares of Common
Stock shall be issued in the Merger. All fractional shares of Common Stock to
which a holder of record of Company Common Stock immediately prior to the
Effective Date would otherwise be entitled after the surrender of such
shareholder's certificate or certificates that represent such shares of Company
Common Stock, shall be rounded up or down to the nearest whole number.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF
THE COMPANY AND THE SHAREHOLDER
Each of the Company and the Shareholder, jointly and
severally, represents and warrants to Parent and Securities, as follows:
Section 2.1 Organization of the Company. The Company is a
corporation duly organized and validly existing under the laws of the State of
New York and has all requisite power and authority to own, lease and operate its
properties and assets and to conduct the Business as now conducted and as
proposed to be conducted. The Company is duly qualified or licensed to do
business in each jurisdiction in which the property owned, leased or operated by
it or the nature of the Business conducted by it makes such qualification
necessary. The Company has no subsidiaries. A true, complete and correct copy of
each of the Articles of Incorporation Organization and the By-laws of the
Company as in effect on the date of this Agreement, including all amendments
thereto, have heretofore been delivered to Parent.
Section 2.2 Authorization. Subject to the receipt of any
necessary approvals by any Governmental Entity and Self Regulatory Authority,
the execution and delivery by the Company and Shareholder of this Agreement and
each of the agreements, documents and instruments to be executed and delivered
by them pursuant hereto (collectively, the "Company Documents"), the performance
by the Company and the Shareholder of their respective obligations hereunder and
thereunder, and the consummation of the transactions contemplated hereby and
thereby, have been duly and validly authorized by all necessary action on the
part of the Company (including, but not limited to, the consent of its
shareholder and director) and the Company and the Shareholder has all necessary
power, authority and capacity, as the case may be, with respect thereto. Subject
to the receipt of any necessary approvals of any Governmental Entity and Self
Regulatory Authority, this Agreement is, and when executed and delivered, each
4
of the Company Documents will be, valid and binding obligations of the Company
and the Shareholder, as the case may be, enforceable against the Company and the
Shareholder, as applicable, in accordance with their respective terms, except
that (a) such enforcement may be subject to any bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or other laws, in effect during
the period beginning on the date hereof and ending upon the termination of the
Survival Period (as defined in Section 4.9), relating to or limiting creditors,
rights generally and (b) the remedy of specific performance and injunctive and
other forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought.
Section 2.3 Capitalization; Shares; Title.
(a) The Shares constitute all of the issued and outstanding
capital stock in the Company, all of which are owned by the Shareholder. Each of
the Shares has been duly authorized, validly issued and is fully paid and
non-assessable. Except for the transactions contemplated by this Agreement,
there are no outstanding rights, commitments or agreements of any kind to which
the Company or the Shareholder is a party or by which the Company or any
Shareholder is bound relating to any (i) options, warrants, calls, preemptive
rights, subscriptions or other rights, convertible securities, agreements or
commitments of any character obligating the Company or the Shareholder to issue,
transfer or sell any shares of capital stock, options, warrants, calls or other
equity interest of any kind whatsoever in the Company or securities convertible
into or exchangeable for such shares or equity interests, (ii) contractual
obligations of the Company to repurchase, redeem or otherwise acquire any
capital stock or equity interest of the Company or (iii) voting trusts, proxies
or similar agreements to which the Company or the Shareholder is a party with
respect to the voting of the capital stock of the Company.
(b) Upon consummation of the transactions contemplated by
this Agreement, Securities shall acquire at the Closing related thereto, good
and marketable title to the Shares acquired at such Closing, free and clear of
any mortgage, pledge, lien, charge, security interest, adverse claim within the
meaning of Section 8-102(a)(1) of the Uniform Commercial Code, restriction of
any kind affecting title or encumbering property, real or personal, tangible or
intangible, or encumbrances of any nature whatsoever (collectively, "Liens").
After giving effect to the transactions contemplated to occur at each of the
Closings, Securities shall have acquired good and marketable title to all of the
Shares, free and clear of all Liens.
Section 2.4 No Violations. Neither the execution and delivery
of this Agreement or the Company Documents by the Company and the Shareholder,
to the extent that they are parties thereto, nor the consummation by the Company
and the Shareholder of the transactions contemplated hereby and thereby, as
applicable, will: (a) violate, conflict with or result in any breach of any the
provision of the Articles of Incorporation or the By-Laws of the Company; (b)
subject any Permit (as defined in Section 2.7(a)) to suspension, modification or
revocation; (c) violate or conflict with any Laws (as defined in Section
2.7(a)); or (d) result in a
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violation or breach of, or constitute a default (or an event which, with notice
or lapse of time or both, would constitute a default) or result in the
termination of, or accelerate the performance required by, or give rise to any
right of termination, modification, cancellation or acceleration or result in
the imposition of any Lien upon any of the assets of the Company under any
agreement, contract, note, bond, mortgage, franchise, permit, loan, lease,
license, guarantee, understanding, commitment, obligation or other arrangement
(written or oral) of any kind to which the Company is a party or by which the
Company or any of its properties or assets may be bound.
Section 2.5 Governmental Consents. Except as set forth in
Schedule 2.5 hereto, no consent, permit, license, order, appointment, franchise,
certificate, approval or authorization of, or registration, declaration or
filing with, any foreign, federal, state or local court, administrative agency
or commission or other governmental authority or instrumentality (a
"Governmental Entity") is required by the Shareholder or the Company in
connection with the execution, delivery and performance of this Agreement and
the Company Documents.
Section 2.6 Litigation. There are no claims, suits, actions or
proceedings pending or, to the knowledge of the Company or the Shareholder,
threatened, nor are there any inquiries, investigations or reviews pending or,
to the knowledge of the Company or the Shareholder, threatened, against,
relating to or affecting the Company or the Shareholder before any Governmental
Entity, Self Regulatory Authority (as hereinafter defined) or arbitral tribunal,
which, if adversely determined, would individually or in the aggregate have a
material adverse effect on the Business, the Company or its prospects, nor is
the Company or the Shareholder subject to any order, rule, writ, judgment,
award, injunction or decree of any Governmental Entity or arbitral tribunal
having such material adverse effect. There are no complaints or sanctions
against the Company or its management by any clients or customers of the
Company. For purposes of this Agreement, "Self Regulatory Authority" shall mean
self-regulatory organizations in the securities and commodities field including,
without limitation, the National Association of Securities Dealers, Inc.
("NASD").
Section 2.7 Compliance with Law; Permits.
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(a) The Company to the best of its knowledge (i) has complied
in all respects with all laws, common laws, rules, regulations, ordinances,
codes, statutes, judgments, injunctions, orders, decrees, permits, policies and
other requirements of any Governmental Entity applicable to the Company or the
Business, or by which any of the Company's properties or assets may be bound
("Laws"); (ii) has all consents, permits, licenses, orders, appointments,
franchises, certificates, approvals, authorizations and registrations issued by
any Governmental Entity or Self Regulatory Authority which are necessary for the
conduct of the Business ("Permits"); and (iii) is not in default with respect to
any order, rule, writ, judgment, award, injunction or decree of any Governmental
Entity or arbitral tribunal, applicable to the Business or any of its assets,
properties or operations.
(b) The Company has filed all returns, reports and information
statements required to be provided to or filed with any Tax authority relating
to Taxes (as
6
defined herein) and has paid in full or contested in good faith or made
adequate provision for the payment of Taxes due or accrued and unpaid as of the
date of this Agreement. For purposes hereof, "Tax" shall mean all taxes,
charges, fees, levies or other assessments of any nature whatsoever, including,
without limitation, any income, gross receipts, excise, real or personal
property, sales, withholding, social security, retirement, unemployment,
occupation, use, service, net worth, payroll, franchise, transfer and recording
taxes, imposed by any federal, state, local or foreign Tax authority, arid shall
include all interest, penalties and additions imposed with respect to such
amounts.
(c) The Company does not act as investment advisor or in the
case of open-end funds, a principal underwriter for any registered investment
company.
(d) The Company, if so required by the nature of the Business,
is duly registered with the Securities and Exchange Commission ("SEC") and the
various states as a broker-dealer. The Company has made available to Parent
true, complete and correct copies of its Form BD, together with all amendments
thereto, and such other filings as may be required by any Governmental Entity.
(e) The Company is not required by the nature of the Business
or its assets to register with the Commodity Futures Trading Commission and the
various states as required as a commodities trading advisor or commodity pool
operator or futures commission merchant.
Section 2.8 Financial Statements; Nondisclosed Liabilities.
--------------------------------------------------
(a) The Company has delivered or otherwise made available to
Parent a true, complete and correct copy of its financial statements, including
net capital computations (collectively, the "Financial Statements") prepared by
the Company since the Incorporation Date in accordance with Rule 17a-5
promulgated by the SEC under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). The Financial Statements are true and correct in all
material respects and fairly present the financial condition of the Company as
of such dates and the results of operations and cash flows for such periods as
required by Rule 17a-5.
(b) There is no liability or obligation of the Company except
(i) those that are disclosed, reflected or reserved against in accordance with
generally accepted accounting principles ("GAAP") on the most recent financial
statements delivered to the NASD and attached hereto as Exhibit 2.8(b) and (ii)
such liabilities or obligations incurred since the date of the financial
statements set forth in the immediately preceding clause (i), in the ordinary
course of business, consistent with past practice, and which, individually and
in the aggregate, do not have a material adverse effect on the Business, the
Company or its prospects.
Section 2.9 Improper Payments. Neither the Company nor any
member, manager, officer, agent, employee or other individual or entity acting
on behalf of the Company, has (a) used any Company or other funds for unlawful
contributions, gifts or entertainment, or
7
has made any unlawful expenditures relating to political activity of
governmental officials or others or established or maintained any unlawful or
unrecorded funds or (b) accepted or received any unlawful contributions,
payments, gifts or expenditures.
Section 2.10 Contracts. Except as set forth in Schedule 2.10,
the Company is not party to any contracts, commitments, obligations or
understandings relating to the Business.
Section 2.11 Investment Contracts, Funds and Clients.
---------------------------------------
(a) The Company does not provide investment management,
investment advisory or sub-advisory services to any individual or entity, nor is
the Company a party to any contract or agreement relating to the rendering of
investment advisory or management services, including without limitation all
sub-advisory services to any individual or entity.
(b) All customer and client accounts maintained by the
Company, if any, are non-discretionary.
(c) The Company has adopted a formal code of ethics and a
written policy regarding xxxxxxx xxxxxxx and employee trading, a true, complete
and correct copy of each of which has been provided or supplied to Parent. Such
code and policy comply in all material respects with applicable Law. The
policies of the Company with respect to avoiding conflicts of interest are as
set forth in the most recent Form ADV thereof, as amended, a true, complete and
correct copy of which has been delivered or supplied by the Company to Parent.
There have been no violations or allegations of violations of such policies that
have occurred or been made that have or would be reasonably likely to have a
material adverse effect on the Business, the Company or its prospects.
(d) Neither the Company nor any other "principal" or
"representative (as defined in Rules 1021 and 1031, respectively, of the NASD
Manual) with the Company has for a period not fewer than ten years prior to the
date of this Agreement been convicted of any crime or is or has been subject to
any disqualification that would be a basis for denial, suspension or revocation
of an NASD registration and there is no reasonable basis for, or proceeding or
investigation, whether formal or informal, or whether preliminary or otherwise,
that is reasonable likely to become the basis for, any such disqualification,
denial, suspension or revocation.
(e) Except as set forth in Schedule 2.11(e), no exemptive
orders have been obtained or are required, nor are any requests pending
therefor, with respect to the Company under the Exchange Act, the Securities Act
of 1933, as amended (the "Securities Act"), the 1940 Act or the Advisers Act of
1940, as amended (the "Advisors Act").
(f) The Company is not party to any agreement or commitment
relating to "soft dollar" arrangements.
8
Section 2.12 Agreements with Regulatory Agencies. Except as
set forth on Schedule 2.12, as of the date of this Agreement, the Company is not
subject to any cease-and-desist or other order issued by, or is a party to any
written agreement, consent agreement or memorandum of understanding with, or is
a party to any commitment letter or similar undertaking to, or is subject to any
order or directive by, or is a recipient of any supervisory letter from or has
adopted any resolutions at the request of any Self Regulatory Authority or
Governmental Entity that materially restricts the conduct of its business or
that in any material manner relates to its capital adequacy, its credit
policies, its management or its business (each, whether or not set forth in
Schedule 2.12, a "Regulatory Agreement"), nor has any Member or the Company: (i)
been advised since the Organization Date by any Self Regulatory Authority or
Governmental Entity that it is considering issuing or requesting any such
Regulatory Agreement; or (ii) received knowledge or notice of any pending or
threatened regulatory investigation. After the date of this Agreement, no
matters referred to in this Section 2.12 shall have occurred except matters
which, individually or in the aggregate, would not have a material adverse
effect on the Business, the Company or its prospects.
Section 2.13 Interest Rate Risk Management Instruments. The
Company is not party to any interest rate swaps, caps, floors and option
agreements and other interest rate risk management arrangements, whether entered
into for the account of the Company or for the account of a customer of any such
entity.
Section 2.14 Insurance. Schedule 2.14 contains a true,
complete and correct list of all policies of fire, liability, production,
completion bond, errors and omissions, fidelity bonds, workmen's compensation
and other forms of insurance owned or held by the Company and true, complete and
correct copies of all such policies have previously been delivered to Parent.
All such policies are in full force and effect, all premiums with respect
thereto covering all periods up to and including the Closing Date have been
paid, and no notice of cancellation or termination has been received with
respect to any such policy. Such policies (i) are sufficient for compliance with
all material requirements of Law and of all agreements to which the Company is a
party, (ii) are valid, outstanding and enforceable policies, (iii) provide
insurance coverage for the assets and operations of the Company consistent with
the coverage customarily maintained by similarly situated companies, (iv) will
remain in full force and effect through the dates set forth in Schedule 2.14
without the payment of additional premiums and (v) will not in any way be
affected by, or terminate or lapse by reason of, the transactions contemplated
by this Agreement. During the last three years the Company has not been refused
any insurance with respect to its assets or operations, nor has its coverage
been limited, by any insurance carrier to which it has applied for any such
insurance or with which it has carried insurance.
Section 2.15 Bank Accounts. Set forth in Schedule 2.15 is the
name of each bank, safe deposit company or other financial institution in which
the Company has an account, lock box or safe deposit box and the names of all
persons authorized to draw thereon or have access thereto.
9
Section 2.16 Full Disclosure. No representation or warranty of
the Shareholder or the Company contained in this Agreement, and no statement
contained in any certificate or schedule furnished or to be furnished by or on
behalf of the Shareholder or the Company to Parent or any of its representatives
pursuant hereto (including the Schedules hereto), contains or will contain any
untrue statement of a material fact, or omits to state any material fact
necessary, in the light of the circumstances under which it was or will be made,
in order to make the statements herein or therein, taken as a whole, not
misleading.
Section 2.17 No Convictions, Injunctions, etc., against
Registered Representatives. Schedule 2.17 sets forth all of the registered
representatives of the Company. No employee, officer, manager or member of the
Company and, to the knowledge of the Company or any Member, no registered
representative of the Company within the last ten years has been convicted of
any felony or misdemeanor involving the purchase or sale of any security or any
insurance, annuity or similar contract or arising cut of such person's conduct
as, or by reason of any misconduct is permanently or temporarily enjoined by
order, judgment or decree of any court of competent jurisdiction from acting as,
an underwriter, broker, dealer, investment adviser, municipal securities dealer,
government securities broker, government securities dealer, transfer agent,
insurance agent, or entity or person required to be registered under the
Commodities Exchange Act of 1936, as amended (the "Commodities Exchange Act"),
the Securities Act, the Exchange Act, the Advisers Act or the 1940 Act, or as an
Associated Person, salesman or employee of any investment company, bank,
insurance company, insurance agency or entity or person required to be
registered under the Commodities Exchange Act, the Securities Act, the Exchange
Act, the Advisers Act or the 1940 Act, or is so permanently or temporarily
enjoined from engaging in or continuing any conduct or practice in connection
with any such activity or in connection with the purchase or sale of any
security or any insurance, annuity or similar contract.
Section 2.18 Brokers and Finders. The Company has not employed
any broker, financial advisor or finder or incurred any liability for any
broker, financial advisory or finders' fees in connection with this Agreement or
the transactions contemplated hereby.
Section 2.19 Independent Counsel. The Company and the
Shareholder have consulted with their own attorney regarding legal matters and
have consulted with their own tax advisor regarding tax consequences associated
with entering into this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND SECURITIES
Parent and Securities jointly and severally, represent and
warrant to the Company and Shareholder, as follows:
Section 3.1 Organization of Parent and Securities. Each of
Parent and Securities is a corporation duly organized and validly existing under
the laws of the State
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of Florida and Delaware, respectively, and has all requisite power and
authority to own, lease and operate its properties and assets and to conduct its
businesses as now conducted.
Section 3.2 Authorization of Parent. Subject to the receipt of
any necessary approvals of any Governmental Entity and Self Regulatory
Authority, the execution and delivery by Parent and Securities as of this
Agreement and of each of the agreements, documents and instruments to be
executed and delivered by it pursuant hereto, the performance by Parent and
Securities, as the case may be, of its obligations hereunder and thereunder, and
the consummation of the transactions contemplated hereby and thereby, have been
duly and validly authorized by all necessary action on the part of and Parent
and Securities have all necessary corporate power and authority with respect
thereto. Subject to the receipt of any necessary approvals of any Governmental
Entity and Self Regulatory Authority, this Agreement is, and when executed and
delivered, each of the other agreements, documents and instruments to be
executed and delivered by Parent and Securities in connection with this
Agreement will be, assuming the due authorization, execution and delivery of
each such agreement by all of the other parties thereto, the valid and binding
agreement of Parent and Securities, enforceable against Parent and Securities in
accordance with their respective terms, except that (a) such enforcement may be
subject to any bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or other laws, now or hereafter in effect, relating to or limiting
creditors, rights generally and (b) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought.
Section 3.3 No Violations. Neither the execution and delivery
of this Agreement and the agreements, documents and instruments to be executed
and delivered by Parent and Securities in connection herewith, nor the
consummation by Parent and Securities, as the case may be, of the transactions
contemplated hereby and thereby will: (a) violate, conflict with or result in
any breach of any provision of the Certificate of Incorporation or By-laws of
Parent or Securities; (b) subject to compliance with the statutes and
regulations referred to in Section 3.4 hereof applicable to Parent and
Securities, violate or conflict with any Laws applicable to Parent or Securities
or by which any of their properties or assets may be bound; or (c) result in a
violation or breach of, or constitute a default (or an event which, with notice
or lapse of time or both, would constitute a default) or result in the
termination of, or accelerate the performance required by, or give rise to any
right of termination, modification, cancellation or acceleration or result in
the imposition of any Lien or the creation of any security interest, charge or
encumbrance upon any of the assets of Parent or Securities under any note, bond,
mortgage, license, franchise, permit, lease, contract, agreement or other
instrument, commitment or obligation to which Parent and Securities is a party
or by which Parent or Securities or any of their respective properties or assets
may be bound; excluding from the foregoing clauses (b) and (c) such violations,
conflicts, breaches and defaults which, in the aggregate, would not have a
material adverse effect on the transactions contemplated by this Agreement.
11
Section 3.4 Governmental Consents. No consent, order or
authorization of, or registration, declaration or filing with, any Governmental
Entity is required by Parent or Securities in connection with the execution,
delivery and performance of this Agreement and the other agreements, documents
and instruments to be executed and delivered by Parent or Securities in
connection with this Agreement or the consummation of the transactions
contemplated hereby or thereby, except: (a) as may be required in connection
with any Permits; and (b) as may be required by any Self Regulatory Authority.
Section 3.5 Brokers and Finders. Parent has not employed any
broker, financial advisor or finder or incurred any liability for any broker,
financial advisory or finders' fees in connection with this Agreement or the
transactions contemplated hereby.
ARTICLE IV
GENERAL COVENANTS
Section 4.1 Conduct of Business of the Company Pending the
Closing. During the period from the date of this Agreement to the Closing Date,
without the prior written consent of Securities, the Company shall, and the
Shareholder shall cause the Company to, conduct its operations and business in
the usual and ordinary course of business and consistent with past practice and
use its best efforts to preserve intact its goodwill, to keep available the
services of its present officers and key employees, and to preserve the goodwill
and business relationships with any clients, customers, brokers and others
having business relationships with it. During the period from the date of this
Agreement to the Closing Date, the Company shall preserve intact its capital
structure (except as contemplated by this Agreement) and shall not issue to any
person or entity any securities of the Company. Notwithstanding the foregoing,
from the date hereof until the Effective Date, neither the Company nor the
Shareholder with respect to the Company, shall take any action with respect to
the operation of the business without the prior written consent of Securities,
except if demanded by any Self Regulatory Authority or Governmental Entity and
such circumstances do not reasonably allow prior notice to Parent and
Securities, provided that if the foregoing circumstances do arise the Company
and the Shareholder shall give Parent prompt written notice thereof.
Section 4.2 Investigation. Parent and Securities may make or
cause to be made such additional investigation of the business and properties of
the Company and its financial and legal conditions as Parent or Securities, as
the case may be, deem reasonably necessary or advisable to further familiarize
itself therewith in accordance with the procedures described in this Section
4.2. The Company shall, and the Shareholder shall cause the Company to, permit
Parent or Securities, as the case may be, and its accountants, counsel and other
representatives to have, during the period from the date of this Agreement to
the Closing Date, reasonable access to the premises, customers, books and
records of the Company relating to the Business (including such books and
records as relate to any of its Taxes), for all periods prior to or as of the
Closing Date. The Company shall, and the Shareholder shall cause the Company to,
furnish Parent or
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Securities, as the case may be, with such financial and operating data and
other information with respect to the Business as Parent or Securities, as the
case may be, from time to time may reasonably request. No investigation pursuant
to this Section 4.2 shall affect any representation or warranty in this
Agreement of any party hereto or any condition to the obligations of the parties
hereto.
Section 4.3 Commercially Reasonable Efforts; Agreement to
Cooperate; Further Assurances. Subject to the terms and conditions of this
Agreement, each of the parties hereto shall use its commercially reasonable
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable under applicable Laws and
Contracts to consummate and make effective the transactions contemplated by this
Agreement including, without limitation, providing information in accordance
with the terms of this Agreement and using its commercially reasonable efforts
to obtain all necessary or appropriate waivers, consents and approvals, to
effect all necessary registrations and filings (including, without limitation,
all filings as may be required by applicable Self Regulatory Authorities) and to
lift any injunction or other legal bar to the Acquisition or the other
transactions contemplated hereby (and, in such case, to proceed with the
Acquisition or any such transaction as expeditiously as possible). In case at
any time after the Closing Date any further action is reasonably necessary or
desirable to carry out the purposes of this Agreement, each of the parties to
this Agreement shall take all such reasonably necessary actions. Each of the
parties hereto will furnish to the other party such necessary information and
reasonable assistance as such other parties may reasonably request in connection
with the foregoing and will provide the other party with copies of all filings
made by such party with any Governmental Entity or any other information
supplied by such party to a Governmental Entity in connection with this
Agreement and the transactions contemplated hereby.
Section 4.4 No Public Announcement. Neither the Company or the
Shareholder, on the one hand, nor Parent or Securities, on the other hand, shall
make any public announcement concerning the transactions contemplated by this
Agreement without the prior approval of the other party or parties, as the case
may be, except as such announcement may be required by Law or the rules and
regulations of a Self-Regulatory Authority, in which case the party required to
make the announcement shall use all reasonable efforts to provide the other
party or parties, as the case may be, with reasonable time under the
circumstances to comment on such announcement in advance of such announcement.
Notwithstanding the foregoing, the parties hereto acknowledge that after the
execution of this Agreement, Securities will make public disclosure of the
transactions contemplated by this Agreement (after giving the Shareholder the
opportunity to review and comment on such disclosure in advance of its release).
Section 4.5 Notice of Developments. Prior to the Closing, the
Company and/or the Shareholder shall promptly (and in any event within one (1)
business day of its obtaining knowledge thereof) notify Parent or Securities in
writing of the occurrence (or non-occurrence) of any event or the existence of
any circumstance of which the Company or the Shareholder have knowledge, the
occurrence (or non-occurrence) or the existence of which
13
would cause or would be likely to cause any representation or warranty
contained in Article III hereof to be untrue or inaccurate in any material
respect and of any failure of the Company or the Shareholder to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
such party hereunder prior to such Closing; provided, however, that delivery of
any notice pursuant to this Section 4.5 shall not limit or otherwise affect any
remedies available to Parent or Securities.
Section 4.6 Expenses; Transfer and Similar Taxes. Whether or
not the transactions contemplated hereby are consummated, all costs and expenses
incurred in connection with the negotiation, execution and performance of this
Agreement and the transactions contemplated hereby (including, without
limitation, the fees and expenses of attorneys, accountants, investment bankers
and other advisors) shall be paid by Securities.
Section 4.7 Application for NASD Approval. The Company, with
the prior written consent of Securities (which consent shall not be unreasonably
withheld) shall file with the NASD (i) a written notice describing, in detail,
the transactions contemplated by this Agreement, (ii) an executed copy of this
Agreement and (iii) a draft of the Company's Form BD Amendment which reflects
the consummation of the transactions contemplated by this Agreement.
Section 4.8 Shareholder Consulting Agreement. The Shareholder
agrees to perform its obligations under and in accordance with that certain
Consulting Agreement, dated the date hereof, between Parent and the Shareholder.
Section 4.9 Restrictions on Resale. The Shareholder agrees not
to sell, hypothecate, pledge, assign, or otherwise transfer or encumber the
Merger Consideration prior to the expiration of the period of two years plus 60
days following the Closing Date (the "Survival Period").
ARTICLE V
CONDITIONS TO THE CLOSINGS
Section 5.1 Conditions to the Obligations of Parent and
Securities. The obligation of Parent and Securities to effect the Closing is
subject to the satisfaction or waiver at or prior to the Closing Date, of the
following conditions:
(a) No statute, rule, regulation, order, decree or injunction
shall have been enacted, entered, promulgated or enforced by any court or
governmental authority which prohibits or restricts the consummation of the
Closing;
(b) There shall not be any suit, action, investigation,
inquiry or other proceeding instituted or pending by or before any Governmental
Entity or Self Regulatory
14
Authority, or instituted or pending by any non-governmental third party, which
seeks to enjoin or otherwise prevent consummation of the transactions
contemplated by this Agreement;
(c) All consents and approvals legally required from any
Governmental Entity or Self Regulatory Authority for the consummation of the
Closing and the transactions contemplated hereby shall have been obtained and be
in effect on the Closing Date (including, without limitation, the approval of
NASD) applicable to the Closing, except those for which failure to obtain such
consents and approvals would not, individually or in the aggregate, have a
material adverse effect on the Business, the Company or its prospects;
(d) The representations and warranties of the Company and the
Shareholder contained in this Agreement shall be true and correct at the date of
this Agreement and as of each Closing Date as though made at and as of the
Closing Date, except to the extent they expressly refer to an earlier time, in
which case they shall be true and correct as of such time;
(e) The Company and the Shareholder jointly and severally
shall have duly performed and complied in all respects with each covenant,
agreement and condition required by this Agreement to be performed by it at or
prior to the Closing Date pursuant to the terms hereof;
(f) The Shareholder shall have obtained the consent or
approval of each individual or entity whose consent or approval shall be
required in connection with the transactions contemplated hereby under any
material contract, agreement, or other instrument, either written or oral, to
which the Company or the Shareholder is a party or by which its assets or
properties may be bound or affected;
(g) There shall have been no developments or events that have
had or could reasonably be expected to have, individually or in the aggregate,
in the reasonable discretion of Parent, an adverse effect on the ability of' the
Company to consummate the transactions contemplated hereby or on the Business or
prospects, operations, properties, assets, liabilities or financial condition of
the Company;
(h) Parent and Securities shall have received such other
documents, instruments and certificates as are required to be delivered by the
Shareholder pursuant to this Agreement or as Parent shall reasonably request
from the Shareholder;
(i) Parent and Securities being satisfied in its sole and
absolute discretion with the results of its "due diligence" investigation
(pursuant to Section 4.2 hereof);
(j) All amounts owed by the Shareholder to Parent shall have
been satisfied and paid in full; and
15
(k) That a certain Consulting Agreement, dated the date
hereof, between the Company and Wolf X. Xxxxxx, Inc. and a certain Consulting
Agreement, dated the date hereof, between Parent and Shareholder shall both be
in full force and effect and Wolf X. Xxxxxx, Inc. and Shareholder shall both not
be in default thereunder immediately prior to the Effective Date.
Section 5.2 Conditions to the Obligation of the Company and
the Shareholder. The obligation of the Company and the Shareholder to effect the
Closing is further subject to the satisfaction (or waiver by the Company or the
Shareholder) at or prior to the Closing Date of the following conditions:
(a) The representations and warranties of Parent and
Securities contained in this Agreement shall be true and correct at the date of
this Agreement and as of the Closing Date as though made at and as of the
Closing Date, except to the extent they expressly refer to an earlier time, in
which case they shall be true and correct as of such time;
(b) Parent and Securities shall have duly performed and
complied in all material respects with each covenant, agreement and condition
required by this Agreement to be performed by it at or prior to the Closing Date
pursuant to the terms hereof; and
(c) The Company shall have received such other documents,
instruments and certificates as are required to be delivered by Parent and
Securities pursuant to this Agreement.
ARTICLE VI
TERMINATION
Section 6.1 Termination. This Agreement may be terminated
at any time prior to the Closing:
(a) by the mutual written consent of Parent and Securities,
on the one hand, and the Company and the Shareholder, on the other hand;
(b) (i) by Parent and Securities upon notice given to the
Company if the Closing has not taken place on or before December 31, 2000;
provided, however, that the failure of the Closing to occur on or before such
date is not the result of the breach of any covenants, agreements,
representations or warranties hereunder of Parent or Securities; or (ii) by the
Company upon written notice given to Securities if the Closing has not taken
place on or before December 31, 2000; provided, however, that the failure of the
Closing to occur on or before such date is not the result of the breach of the
covenants, agreements, representations or warranties hereunder of the Company or
the Shareholder;
16
(c) by Parent or Securities, on the one hand, or the Company
and the Shareholder, on the other hand, upon notice given to the other if any
court or Governmental Entity of competent jurisdiction will have issued a final
permanent order, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement;
(d) by Parent or Securities, upon a breach of any
representation, warranty, covenant or agreement on the part of the Company or
the Shareholder set forth in this Agreement, or if any representation or
warranty of the Company or the Shareholder shall have become untrue, in either
case such that the conditions set forth in Section 5.1(d) hereof or Section
5.1(e) hereof would not be satisfied as of the time of such breach or as of the
time such representation or warranty shall have become untrue; or
(e) by the Company and the Shareholder, upon a breach of any
representation, warranty, covenant or agreement on the part of Parent or
Securities set forth in this Agreement, or if any representation or warranty of
Parent or Securities shall have become untrue, in either case such that the
conditions set forth in Section 5.2(a) hereof or Section 5.2(b) hereof would not
be satisfied as of the time of such breach or as of the time such representation
or warranty shall have become untrue.
Section 6.2 Effect of Termination. In the event of the
termination of this Agreement as provided in Section 6.1 hereof, all of the
obligations and liabilities of the parties under this Agreement shall terminate;
provided, however, that (i) nothing in this Section 6.2 shall relieve any party
from any liability for any breach of this Agreement and (ii) the obligations of
the parties to this Agreement under Section 4.6 hereof shall survive any such
termination.
ARTICLE VII
INDEMNIFICATION
Section 7.1 Survival. Notwithstanding any investigation made
by each of the parties hereto, all representations and warranties of each of the
parties in this Agreement shall survive for a period of two (2) years from the
Closing Date.
Section 7.2 Indemnification by the Company and the
--------------------------------------------
Shareholder.
-----------
(a) The Company and the Shareholder, jointly and severally
as to themselves and each other, shall indemnify, defend and hold harmless
Parent and Securities, each of their successive successors and assigns and its
directors, officers, agents, representatives and employees (collectively, the
"Purchaser Indemnified Parties") from and against any and all liability, loss,
damage, claim, charge, action, suit, proceeding, investigation, deficiency, Tax,
interest, penalty, reasonable cost and reasonable expense (including, without
limitation, fees of outside legal counsel) (a "Loss") imposed on, incurred or
suffered by or asserted against any Purchaser Indemnified Party, to the extent
such Loss results from or arises out of: (i) any breach of any representation or
warranty of the Company or the Shareholder contained in this
17
Agreement, (ii) any breach of any covenant of the Company or the Shareholder
set forth in this Agreement and (iii) the ownership or operation of the Business
or the Company prior to the Closing Date; provided, however, that such
indemnification shall be limited to the aggregate amount of $25,000 in cash plus
the Merger Consideration.
(b) If the Shareholder should be required to indemnify any
Purchaser Indemnified Party, the Shareholder shall have no right to contribution
by or indemnification from the Company.
Section 7.3 Indemnification by Parent and Securities. Parent
and Securities shall jointly and severally indemnify, defend and hold harmless
the Shareholder (and, if the Acquisition is not consummated, the Company and its
directors, officers, agents, representatives and employees) and his successive
successors and permitted assigns (collectively, the "Seller Indemnified Parties"
and, together with the Purchaser Indemnified Parties, collectively referred to
as the "Indemnified Parties") from and against any and all Losses imposed on,
incurred or suffered by or asserted against any Seller Indemnified Party,
directly or indirectly, to the extent resulting from, arising out of, or
incurred with respect to (i) any breach of any representation or warranty of
Parent and Securities contained in this Agreement and (ii) any breach of any
covenant of Parent or Securities set forth in this Agreement; provided, however,
that such indemnification shall be limited to the aggregate amount of $25,000.
Section 7.4 Indemnification Procedures.
--------------------------
(a) In order for an Indemnified Party to be entitled to any
indemnification provided for under this Agreement, the Indemnified Party shall
deliver to the party against whom indemnification is sought in accordance with
Section 7.2 or 7.3, as the case may be (an "Indemnifying Party"), notice of its
claim for indemnification with reasonable promptness after determining to make
such claim. The failure by any Indemnified Party to so notify the Indemnifying
Party, as the case may be, shall not relieve the Indemnifying Party from any
liability which it may have to such Indemnified Party under this Agreement,
except to the extent that the Indemnifying Party shall have been materially and
adversely prejudiced by such failure. If the Indemnifying Party disputes its
liability with respect to such claim, the Indemnifying Party and the Indemnified
Party shall proceed in good faith to negotiate a resolution of such dispute and,
if not resolved through negotiations, such dispute shall be resolved by
litigation in an appropriate court of competent jurisdiction as provided in
Section 8.4 or by arbitration by the NASD.
(b) If any claim for indemnification under Section 7.2 or 7.3
involves the claim of any third party against an Indemnified Party (a
"Third-Party Claim"), the Indemnifying Party shall, upon notice as provided
above, assume control over the defense thereof, with counsel reasonably
satisfactory to the Indemnified Party, and, after notice from the Indemnifying
Party to the Indemnified Party of its assumption of the defense thereof, the
Indemnifying Party shall not be liable to such Indemnified Party for any legal
or other expenses subsequently incurred by the Indemnified Party in connection
with the defense thereof (but the
18
Indemnified Party shall have the right, but not the obligation, to participate
at its own cost and expense in such defense by counsel of its own choice) or for
any amounts paid or foregone by the Indemnified Party as a result of any
settlement or compromise thereof that is effected by the Indemnified Party
(without the written consent of the indemnifying party).
(c) Anything in Section 7.3 notwithstanding, if both the
Indemnifying Party and the Indemnified Party are named as parties or subject to
such Third-Party Claim and either such party determines with advice of counsel
that there may be one or more legal defenses available to it that are different
from or additional to those available to the other party or that a conflict of
interest between such parties may exist in respect of such Third-Party Claim,
then the Indemnifying Party may decline to assume the defense on behalf of the
Indemnified Party or the Indemnified Party may retain the defense on its own
behalf, and, in either such case, after notice to such effect is duly given
hereunder to the other party, the Indemnifying Party shall be relieved of its
obligation to assume the defense on behalf of the Indemnified Party, but shall
be required to pay any legal or other expenses including, without limitation,
reasonable attorney's fees and disbursements, incurred by the Indemnified Party
in such defense.
(d) If the Indemnifying Party assumes the defense of any such
Third-Party Claim, the Indemnified Party shall cooperate fully with the
Indemnifying Party and shall appear and give testimony, produce documents and
other tangible evidence, allow the Indemnifying Party reasonable access to the
books and records of the Indemnified Party and otherwise provide reasonable
assistance to the Indemnifying Party in conducting such defense. No Indemnifying
Party shall, without the consent of the Indemnified Party, consent to entry of
any judgment or enter into any settlement or compromise which does not include
as an unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect of such Third-Party
Claim. Provided that proper notice is duly given, if the Indemnifying Party
shall fail promptly and diligently to assume the defense thereof, then the
Indemnified Party may respond to, contest and defend against such Third-Party
Claim (but the Indemnifying Party shall have the right to participate at its own
cost and expense in such defense by counsel of its own choice) and may make in
good faith any compromise or settlement with respect thereto, and recover from
the Indemnifying Party the entire cost and expense thereof including, without
limitation, reasonable attorney's fees and disbursements and all amounts paid or
foregone as a result of such Third-Party Claim, or the settlement or compromise
thereof. The indemnification required hereunder shall be made by periodic
payments of the amount thereof during the course of the investigation or
defense, as and when bills or invoices are received or loss, liability,
obligation, damage or expense is actually suffered or incurred.
(e) Notwithstanding the foregoing provisions of this Section
7.3, in circumstances where Section 7.3(c) does not apply and the Indemnifying
Party has diligently assumed the defense of the Third-Party Claim, the
Indemnified Party shall nonetheless have the right at its own cost and expense
to take over and assume the control (as to itself) of the defense
19
or settlement of the Third-Party Claim. The Indemnifying Party shall not be
liable under this Article VII for any settlement or compromise effected without
its consent.
(f) The amount of any Loss for which indemnification is
provided hereunder shall be reduced pro tanto by any amount recovered by an
Indemnified Party (whether by payment, discount or otherwise) from any third
party, including without limitation under any insurance policy. If such recovery
occurs subsequent to any payment by the Indemnifying Party pursuant to this
Section 7.3, the Indemnified Party shall promptly pay to the Indemnifying Party
the amount of such recovery up to the amount paid by the Indemnifying Party with
respect to such claim.
Section 7.5 Exclusive Remedy. Each of the parties hereto
acknowledges that indemnification pursuant to this Article VII shall be the
exclusive remedy of any Indemnified Party with respect to a Claim relating to
any breach of a representation, warranty or covenant under this Agreement.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Amendment, Modification and Waiver. This Agreement
may not be amended, modified or waived except by an instrument or instruments in
writing signed and delivered on behalf of each of the parties hereto.
Section 8.2 Entire Agreement. This Agreement (together with
the schedules, exhibits and other agreements, documents and instruments
delivered pursuant hereto) constitutes the entire agreement among the parties
with respect to the subject matter hereof and supersedes all other prior
agreements and understandings both written and oral, among the parties or any of
them with respect to the subject matter hereof.
Section 8.3 Notices. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall be given (and
shall be deemed to have been duly given upon receipt) by delivery in person, by
telecopy (which is confirmed), or by registered or certified mail (postage
prepaid, return receipt requested) to the parties at their respective addresses
first set forth herein or to such other address as the person to whom notice is
given may have previously furnished to the others in writing in the manner set
forth above; provided, however, that any notice to Parent and Securities shall
not be deemed given until a copy of such notice is delivered
to: Xxxxxx Xxxxxx LLP, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
(Attention: Xxxxx X. Xxxxxx, Esq.), Telecopy No.: (000) 000-0000.
Section 8.4 Governing Law and Jurisdiction. This Agreement
shall be governed by and construed in accordance with the laws of the State of
New York applicable to agreements made and to be performed entirely in that
State.
20
Section 8.5 Headings. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
Section 8.6 Assignment; Binding Agreement. Neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto (whether by operation of law or otherwise)
without the prior written consent of the other parties hereto; provided,
however, that Parent may assign or delegate either this Agreement or any of its
rights, interests and obligations hereunder to any direct or indirect
wholly-owned subsidiary of Parent in which event Parent will remain liable
hereunder. This Agreement shall be binding upon and inure to the benefit of and
be enforceable by the parties hereto and their respective successors and
permitted assigns.
Section 8.7 Third Party Beneficiaries. Nothing in this
Agreement, express or implied, is intended to or shall confer upon any
individual or entity other than the parties hereto any rights, benefits or
remedies of any nature whatsoever under or by reason of this Agreement.
Section 8.8 Specific Performance. The parties recognize and
agree that if for any reason any of the provisions of this Agreement are not
performed in accordance with their specific terms or are otherwise breached,
immediate and irreparable harm or injury would be caused for which money damages
would not be an adequate remedy. Accordingly, each party agrees that, in
addition to any other available remedies, each other party shall be entitled to
an injunction restraining any violation or threatened violation of the
provisions of this Agreement. In the event that any action should be brought in
equity to enforce the provisions of the Agreement, no party will allege, and
each party hereby waives the defense, that there is an adequate remedy at law.
Section 8.9 Severability. Any term or provision of this
Agreement which is invalid or unenforceable in any jurisdiction shall, as to
that jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of
any of the terms or provisions of this Agreement in any other jurisdiction. If
any provision of this Agreement is so broad as to be unenforceable, the
provision shall be interpreted to be only so broad as is enforceable.
Section 8.10 Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be deemed to be an original, but
all of which shall constitute one and the same agreement.
21
IN WITNESS WHEREOF, each of the parties has signed this
Agreement or caused this Agreement to be executed on its behalf by its officer
thereunto duly authorized, all as of the day and year first above written.
XXXXXXXXXXX.XXX, INC.,
a Florida corporation
Address:
00 Xxxxxxxx
Xxxxxxxxx
Xxx Xxxx, XX 00000
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Chief Executive Officer
WEALTHHOUND SECURITIES, INC.,
a Delaware corporation
Address:
00 Xxxxxxxx
Xxxxxxxxx
Xxx Xxxx, XX 00000
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Chief Executive Officer
WAP, INC.,
a New York corporation
Address:
000 Xxxx Xxxxxx Xxxxx
Xxxxx 000
Xxx Xxxx, XX 1016
By: /s/ Wolf X. Xxxxxx
--------------------------------------
Name: Wolf X. Xxxxxx
Title: President
/s/ Wolf X. Xxxxxx
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Wolf X. Xxxxxx
