Exhibit 10.2
STANDSTILL AGREEMENT
This Standstill Agreement (the "Agreement"), dated as of November 2, 2004, is
among vFinance, Inc., a Delaware corporation (the "Company"), and each of Xxxxxx
Xxxxx, Xxxxx Xxxxx and Xxxxxxx Xxxxx (collectively, the "Purchasers").
WHEREAS, simultaneously with the execution of this Agreement, the Purchasers are
entitled to receive a portion of up to 8,324,690 shares of the Company's common
stock, par value $.01 per share (the "Common Stock") pursuant to the terms of:
(a) an Asset Purchase Agreement dated as of the date hereof between vFinance
Investments Holdings, Inc. ("Holdings") and Global Partners Securities, Inc.
("Global") and (b) a Stock Purchase Agreement dated as of the date hereof
between Holdings and Xxxxx0.xxx, Inc. ("Level2"); and
WHEREAS, the Company and each of the Purchasers desire to establish in this
Agreement certain conditions of such Purchaser's relationship with Company;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and in the Agreement, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions.
(a) "ACQUISITION PROPOSAL" shall mean a bona fide, written
proposal, which proposal includes all material terms of a proposed
transaction, received by the Board of Directors of the Company from
any Person or Group proposing to enter into a transaction which, if
effected, would constitute a Change of Control of the Company.
(b) "AFFILIATE" shall have the meaning given it in Rule 12b-2 under
the Exchange Act.
(c) "ASSOCIATE" shall have the meaning given it in Rule 12b-2 under
the Exchange Act.
(d) "BENEFICIAL OWNER" shall have the meaning given it in Rule
13(d)(3) under the Exchange Act; and "Beneficially Own" and
"Beneficial Ownership" shall apply to securities held by a
Beneficial Owner.
(e) "CHANGE OF CONTROL" shall mean (1) the acquisition by a Third
Party of more than 50% of the Company's then outstanding Voting
Stock, excluding however, a purchase agreement with an underwriter
or group of underwriters in a registered public offering to the
public; (2) the consummation of a merger, acquisition,
consolidation or reorganization or series of such related
transactions involving the Company, unless both (x) immediately
after such transaction or transactions, the stockholders of the
Company immediately prior to such transaction shall Beneficially
Own at least 50% of the outstanding Voting Stock of the Company
(or, if the Company shall not be the surviving company in such
merger, consolidation or reorganization, the Voting Stock of the
surviving corporation issued in such transaction in respect of
Voting Stock of the Company shall represent at least 50% of the
Voting Stock of such surviving company), and (y) the Company is not
subject to an agreement that provides that individuals who are
directors of the Company immediately prior to such transaction (or
individuals designated by the Company at or before the closing of
such transaction) shall constitute less than a majority of the
directors of the Company (or such surviving company, as the case
may be) after the closing of such transaction; (3) a change or
changes in the membership of the Company's Board of Directors which
represents a change of a majority or more of such membership during
any twelve month period (unless such change or changes in
membership are caused by the actions of the then-existing Board of
Directors); or (4) the consummation of a sale of all or
substantially all of the Company's assets unless immediately after
such transaction, the stockholders of the Company immediately prior
to such transaction shall beneficially own at least 50% of the
Voting Stock of the acquiring company.
(f) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
as amended.
(g) "GROUP" shall have the meaning provided in Section 13(d)(3) of
the Exchange Act.
(h) "PERSON" means an individual, corporation, partnership,
association, trust, unincorporated organization or other entity.
(i) "THIRD PARTY" shall mean any Person (other than any Purchaser
and his Affiliates and Associates) or Group (other than any Group
that includes any Purchaser or its Affiliates or Associates).
(j) "TOTAL VOTING POWER" at any date, with respect to any Person,
shall mean the total combined Voting Power of all the Voting Stock
of such Person then outstanding and entitled to vote.
(k) "VOTING POWER" with respect to any Voting Stock of any Person
on any date shall mean the voting power in the general election of
directors of the relevant Person to which such Voting Stock would
be entitled on such date.
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(l) "VOTING STOCK" of any Person shall mean any securities entitled
to vote generally in the election of directors of such Person, or
any direct or indirect rights or options or warrants to acquire any
such securities or any securities (including, without limitation,
the Preferred Stock) convertible or exercisable into or
exchangeable for such securities, whether or not such securities
are so convertible, exercisable or exchangeable at the time of
determination.
ARTICLE II
TERM
SECTION 2.01 Term. The term (the "Term") of this Agreement shall commence on the
date hereof and shall continue until the earliest to occur of the following:
(a) the fourth anniversary of the disbursement of all of the shares
of Common Stock to which the Purchasers are entitled pursuant to
the Stock Escrow Agreement ("Escrow Agreement") dated as of the
date hereof among Holdings, the Company, Global, Level2 and Xxxxxxx
& Xxxxxx, LLP;
(b) the termination of the Escrow Agreement prior to the
distribution of any of the Common Stock to the Purchasers in
accordance with its terms;
(c) the date on which the Purchasers' aggregate beneficial
ownership is less than five percent (5%) of the Company's Voting
Stock.; and
(d) the termination of the employment and membership on the Board
of Directors of both Xxxxxxx Xxxxxxx and Xxxxxxx Xxxxxxx.
ARTICLE III
STANDSTILL PROVISIONS
SECTION 3.01 Restrictions of Certain Actions. Each of the Purchasers hereby
severally agrees that during the Term, neither he nor any Affiliate or Associate
of such Purchaser will, singly or as part of a Group, directly or indirectly:
(a) make or in any way propose or participate in any "solicitation"
of "proxies" to vote (as such terms are defined in Rule 14a-1 under
the Exchange Act), solicit any consent or communicate with or seek
to advise or influence any Person, other than the Company, with
respect to the solicitation or voting of any Voting Stock of the
Company in opposition to any matter that has been recommended by
the Board or in favor of any matter that has not been approved by
the Board of Directors of the Company, or become a "participant" in
any "election contest" (as such terms are defined or used in Rule
14a-11 under the Exchange Act) with respect to Company;
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(b) form, be a member of, join or encourage the formation of, any
Group with respect to any Voting Stock of the Company or the
acquisition of any assets of the Company;
(c) deposit any Voting Stock of the Company into a voting trust or
subject any such Voting Stock to any arrangement or agreement with
respect to the voting thereof which would cause him to be in
violation of any of the other provisions of this Agreement;
(d) seek election to or seek to place a representative on the Board
of Directors of the Company, if such action is opposed by Xxxxxxx
Xxxxxxx and Xxxxxxx Xxxxxxx, or seek the removal of any member of
the Board of Directors the Company if such action is opposed by
Xxxxxxx Xxxxxxx and Xxxxxxx Xxxxxxx;
(e) call or seek to have called any meeting of the stockholders of
the Company other than participation as a director of the Company
in calling, or seeking to have called, meetings of stockholders
generally;
(f) solicit, seek to effect, negotiate with or provide any
information to any other party with respect to, or make any
statement or proposal, whether written or oral, the Board of
Directors of the Company or otherwise make any public announcement
or proposal whatsoever with respect to a merger or acquisition of
the Company, the sale of all or a substantial portion of the assets
of the Company and its subsidiaries, the liquidation of the
Company, the recapitalization of the Company or similar business
transactions with respect to the Company or take any action which
might require the Company and at least one Purchaser to make a
public announcement with respect to any such matters;
(g) instigate, encourage or assist, or enter into any discussions
or arrangements with, any Third Party to do any of the actions
described in Sections 3.01(a) through (f); or
(i) if any Purchaser or any of his Affiliates or Associates owns or
acquires any Voting Stock in violation of this Agreement, such
Voting Stock shall immediately be disposed of to persons who are
not Affiliates or Associates thereof but only in compliance with
the provisions of this Section 3.01 and Section 4.01; provided,
however, that Company may also pursue any other available remedy to
which it may be entitled as a result of such violation.
Notwithstanding the restrictions contained in this Section 3.01, the Purchasers
shall not be prevented from complying with the requirements of Sections 13(d)
and 16(a) of the Exchange Act and the rules and regulations thereunder, in each
case, as from time to time in effect, or any successor provisions or rules with
respect thereto, or any other applicable law or rule or regulation of any
governmental body.
SECTION 3.02 Suspension of Restrictions. The limitations provided in Section
3.01 and Section 4.01 shall immediately be suspended upon the occurrence of any
of the following events:
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(a) any Third Party commences a tender or exchange offer seeking to
acquire Beneficial Ownership of 50% or more of the outstanding
shares of Voting Stock, but only if (i) the Company has not within
10 days after commencement of such offer (or such longer period as
may then be permitted under applicable law for the Company's
initial recommendation with respect to such offer), publicly
recommended that such offer not be accepted, or (ii) all of the
material conditions to such offer relating to the elimination or
satisfaction of the material defensive provisions established by
the Company, including any rights plan or similar defensive
provision of the Company have been satisfied or waived;
(b) the Company's receipt of an Acquisition Proposal from any Third
Party but only if the Company has not, within 15 days after such
receipt, rejected such Acquisition Proposal;
(c) the occurrence of a Change of Control of the Company;
(d) the public announcement by the Company that it is "for sale";
(e) the execution of a definitive agreement which, if consummated,
would result in a Change of Control of the Company;
(f) the public announcement by or on behalf of any Person or Group
(other than the Purchaser and its Affiliates) of the commencement
of a bona fide proxy or consent solicitation subject to Section 14
of the Exchange Act (or any successor provision) to elect or remove
a majority of the directors of the Company which is not, within 10
days after the announcement of such proxy or consent solicitation
(or such longer period as may then be permitted under applicable
law for the Company's initial recommendation with respect to such
contest if such a period is specified) publicly opposed by the
Company's Board of Directors and which would, if successful, result
in a change in the composition of a majority of the Board of
Directors of the Company; or
(g) the adoption by the Board of Directors of the Company of a plan
of liquidation or dissolution.
The Company shall provide each Purchaser with prompt written notice of the
occurrence of any of the events set forth in this Section 3.01 or of the receipt
by the Company of an Acquisition Proposal from any Third Party (such notice to
be provided within ten days after receipt thereof, but without disclosing the
terms thereof or the identity of such Third Party). Upon any (i) withdrawal or
lapsing of any such tender or exchange offer referred to in Section 3.02(a)
hereof in which such Third Party does not acquire more than 15% of the
outstanding Voting Stock of the Company, (ii) withdrawal, rejection or
termination of an Acquisition Proposal referred to in Section 3.02(b) hereof,
(iii) the public withdrawal of any "for sale" notice referred to in Section
3.02(d) hereof, (iv) the termination of the agreement referred in Section
3.02(e) hereof without consummation thereof, (v) the withdrawal or termination
or failure of the solicitation referred to in Section 3.02(f) hereof or (vi) the
termination of the plan of liquidation referenced in Section 3.02(g) hereof, as
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the case may be, the limitations provided in Sections 3.01 and 4.01 hereof
(except to the extent then suspended as a result of any other event specified in
Section 3.02 hereof) hereof shall again be applicable for so long as and only to
the extent provided therein without any extension of the term thereof.
ARTICLE IV
TRANSFER RESTRICTIONS
SECTION 4.01 Permitted Transfers. During the Term, the Purchaser shall not sell,
pledge, hypothecate, assign or otherwise transfer (each a "Transfer") any Voting
Stock of the Company other than the following Transfers:
(a) a Transfer to an Affiliate of such Purchaser, provided that
such Affiliate becomes a party to, and agrees to be bound by, this
Agreement;
(b) a Transfer by partnerships by way of distribution to a limited
partner or former limited partner of such Purchaser that is not an
Affiliate of such Purchaser;
(c) a private Transfer (i) to any "person" (within the meaning of
Section 13(d)(3) of the Exchange Act), that is not an Affiliate or
Associate of such Purchaser, which to the knowledge of the
Purchaser after inquiry beneficially owns or, as a result of such
sale or transfer, will beneficially own less than ten percent (10%)
of the Total Voting Power of the Company (a "Permitted
Transferee"), provided, that such person will not be a Permitted
Transferee and no such Transfer shall be permitted if such person
has proposed a business combination or similar transaction with, or
a Change of Control of, the Company or (ii) to an account managed
by an institutional manager described in Rule 13f-1 of the Exchange
Act with respect to which the transferred Voting Stock would
constitute "Section 13(f) securities" within the meaning of Rule
13f-1(c) of the Exchange Act; and
(d) a sale to the public (i) pursuant to Rule 144 of the Securities
Act or (ii) pursuant to the exercise by the Purchasers of their
rights under the Registration Rights Agreement dated as of the date
hereof among the Company, Global and EquityStation, Inc.
ARTICLE V
MISCELLANEOUS
SECTION 5.01 Enforcement. Each of the Purchasers and Company acknowledge and
agree that irreparable damage would occur if any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. Accordingly, the parties will be entitled to an injunction
or injunctions to prevent breaches of this Agreement and to enforce specifically
its provisions in any court having jurisdiction, this being in addition to any
other remedy to which they may be entitled at law or in equity.
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SECTION 5.02 Entire Agreement; Waivers. This Agreement constitutes the entire
agreement among the parties hereto pertaining to the subject matter hereof and
thereof and supersede all prior and contemporaneous agreements, understandings,
negotiations and discussions, whether oral or written, of the parties with
respect to such subject matter. No waiver of any provision of this Agreement
shall be deemed or shall constitute a waiver of any other provision hereof
(whether or not similar), shall constitute a continuing waiver unless otherwise
expressly provided nor shall be effective unless in writing and executed (i) in
the case of a waiver by Company, by the Company and (ii) in the case of a waiver
by the Purchasers, by holding 66-2/3% of the shares of Common Stock disbursed to
the Purchasers pursuant to the Escrow Agreement.
SECTION 5.03 Amendment or Modification. The parties hereto may not amend or
modify this Agreement except in such manner as may be agreed upon by a written
instrument executed by the Company and Two-Thirds in Interest of the Purchasers.
SECTION 5.04 Successors and Assigns. All the terms and provisions of this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective transferees, successors and assigns (each of which
such transferees, successors and assigns shall be deemed to be a party hereto
for all purposes hereof); provided, however, that (i) neither Company nor any
Purchaser may assign or transfer any of its rights or obligations hereunder
without the prior written consent of the Two-Thirds in Interest of the
Purchasers or the Company, respectively and (ii) no transfer or assignment by
any party shall relieve such party of any of its obligations hereunder.
SECTION 5.05 Severability. If any provision of this Agreement is held by a court
of competent jurisdiction to be unenforceable, the remaining provisions shall
remain in full force and effect. It is declared to be the intention of the
parties that they would have executed the remaining provisions without including
any that may be declared unenforceable.
SECTION 5.06 Headings. Descriptive headings are for convenience only and will
not control or affect the meaning or construction of any provision of this
Agreement.
SECTION 5.07 Counterparts. For the convenience of the parties, any number of
counterparts of this Agreement may be executed by the parties, and each such
executed counterpart will be an original instrument.
SECTION 5.08 Notices. All demands, requests, notices and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if delivered personally
or sent by United States first class mail, postage prepaid, or by reputable
overnight courier service, and to the parties hereto at the following address or
at such other address as any party hereto shall hereafter specify by notice to
the other party hereto:
(i) if to the Company, addressed to:
vFinance, Inc.
0000 Xxxxx Xxxxxxxx Xxxxx, Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
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with a copy (which shall not constitute notice) to:
Xxxxxxx & Xxxxxx, LLP
000 Xxxx Xxx Xxxx Xxxx.
Xxxxx 0000
Xxxx Xxxxxxxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxxxx, P.A.
(ii) if to the Purchasers, addressed to:
Xxxxxx Xxxxx
00000 XX 00xx Xxxxx
Xxxxxxxx, XX 00000
Xxxxx Xxxxx
0000 XX 000xx Xxxxxx
Xxxxxxxx, XX 00000
Xxxxxxx Xxxxx
00000 XX 00xx Xxxxx
Xxx. XXX
Xxxxxxxx, XX 00000
with a copy (which shall not constitute notice) to:
Wasserstrom Giulianti, P.A.
0000 Xxxxx Xxxxxx
Wachovia Center Xxxxxxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxx Xxxxxxxxxxx, Esq.
Except as otherwise provided herein, all such demands, requests, notices and
other communications shall be deemed to have been received on the date of
personal delivery thereof or on the third business day after the mailing
thereof.
SECTION 5.09 Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic substantive law of the State of New York, without
giving effect to any choice or conflict of law provision or rule that would
cause the application of the law of any other jurisdiction.
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SECTION 5.10 Termination. This Agreement will terminate at the end of the Term
or earlier upon the written approval of the Company and the Purchasers holding
66-2/3% of the shares of Common Stock disbursed to the Purchasers pursuant to
the Escrow Agreement.
IN WITNESS WHEREOF, the Company and the Purchasers have each caused this
Agreement to be executed as of the date first above written by their respective
officers thereunto duly authorized.
vFINANCE, INC.
By: Xxxxxxx Xxxxxxx
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Name: Xxxxxxx Xxxxxxx
Title: Chief Executive Officer and President
/s/ Xxxxxx Xxxxx
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Xxxxxx Xxxxx
/s/ Xxxxx Xxxxx
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Xxxxx Xxxxx
/s/ Xxxxxxx Xxxxx
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Xxxxxxx Xxxxx
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