AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of
September 7, 2000, is by and among EQUITEX, INC., a Delaware corporation
("Equitex") with offices at Xxxxx 000, 0000 XXX Xxxx., Xxxx Xxxxx Xxxxxxx,
Xxxxxxx 00000, XX.XXX, INC., a Delaware corporation and a wholly owned
subsidiary of Equitex ("XX.xxx") with offices at Xxxxx 000, 0000 XXX Xxxx., Xxxx
Xxxxx Xxxxxxx, Xxxxxxx 00000, XXXXXX X. XXXXXXXXX ("Xxxxxxxxx") , XXXXX XXXXXXX
("Xxxxxxx"), MERIDIAN CAPITAL GROUP, LLC, a Delaware limited liability company
("Meridian" and collectively with Xxxxxxxxx and Xxxxxxx, the "Sellers") with
offices at 0000 Xxxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxx, Xxx Xxxx 00000 and THE
MERIDIAN RESIDENTIAL GROUP, INC., a New York corporation (the "Target") with
offices at 0000 Xxxxxxxx Xxxxxx, Xxxxxxxx, Xxx Xxxx 00000. Equitex, XX.xxx, the
Sellers and the Target are referred to collectively herein as the "Parties."
ARTICLE I
DEFINITIONS
"AFFILIATE" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act of 1934, as amended.
"CODE" means the Internal Revenue Code of 1986, as amended.
"DGCL" means the General Corporation Law of the State of Delaware, as
amended.
"EFFECTIVE TIME" means such time as the Target and XX.xxx file the
Certificate of Merger with the Secretary of State of Delaware and with the
Secretary of State of New York or at such later time as specified in the
Certificate of Merger.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"GOVERNMENTAL ENTITY" shall mean any court, self-regulatory
organization, administrative or regulatory agency or commission or other U.S.,
federal, state, local, municipal or foreign government or governmental body,
official, authority or instrumentality.
"KNOWLEDGE" means (1) with respect to the Target, the actual knowledge
of any of its directors and officers, (2) with respect to the Sellers, the
actual knowledge of the Sellers and (3) with respect to Equitex and XX.xxx, the
actual knowledge of any of their directors and officers.
"LIABILITIES" means any and all debts, liabilities and obligations,
whether accrued or fixed, absolute or contingent, matured or unmatured or
determined or determinable, including without limitation, those arising under
any law (including, without limitation, any environmental law), action or
government order and those arising under any contract, agreement, arrangement,
commitment or undertaking.
"LIENS" shall mean all liens, charges, security interests, pledges,
rights or claims of others, restraints on transfer or other encumbrances of any
nature whatsoever.
"MATERIAL ADVERSE CHANGE" means a change or development which results,
or is likely to result, in a Material Adverse Effect.
"MATERIAL ADVERSE EFFECT" means any circumstance, change or effect that
is, or reasonably would be expected to be, materially adverse to the business or
financial condition of a Person or on the ability of the Parties to consummate
the transactions contemplated by this Agreement; provided, however, that
"Material Adverse Effect" shall not include any circumstance, change or effect
directly or indirectly attributable to (1) circumstances, changes or effects
that generally affect the industry (or a portion thereof) in which the Target
operates; (2) changes in general economic, legal, regulatory or political
conditions relating to the Target's business or (3) any actions taken or omitted
to be taken pursuant to the terms of this Agreement.
"PERSON" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization or a Governmental Entity (or any
department, agency or political subdivision thereof).
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"TARGET SHARE" means any share of the common stock, par value $0.01 per
share, of the Target.
ARTICLE II
EFFECT OF THE MERGER
SECTION 2.1 THE MERGER. The Target shall be merged with and into XX.xxx
at the Effective Time (the "Merger").
SECTION 2.2 SURVIVING CORPORATION. XX.xxx shall survive the Merger as
the surviving corporation and shall continue its corporate existence under the
laws of the State of Delaware (the "Surviving Corporation"). Within a reasonable
time after the Effective Time, XX.xxx shall change its corporate name to
"Meridian Residential Group, Inc."; provided that such name shall be used by
XX.xxx only in connection with business conducted by the Target prior to the
Closing.
SECTION 2.3 THE CLOSING. The closing of the transactions contemplated
by this Agreement (the "Closing") shall take place at the offices of Xxxxxxx
Xxxxxxxx & Wood, Two Xxxxx Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, commencing at
10:00 a.m., Eastern Standard Time, on the later of September 30, 2000 or the
second business day following the satisfaction or waiver of all of the
conditions to the obligations of the Parties to consummate the transactions
contemplated hereby (other than conditions with respect to actions the
respective Parties will take at the Closing itself) or such other date and place
as the Parties may mutually determine (the "Closing Date").
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SECTION 2.4 DELIVERIES AT THE CLOSING. At the Closing, (a) the Sellers
and the Target will deliver to Equitex and XX.xxx the various certificates,
instruments and documents required to be delivered under this Agreement, (b)
Equitex and XX.xxx will deliver to the Sellers and the Target the various
certificates, instruments and documents required to be delivered under this
Agreement, (c) Equitex will deliver to the Sellers certificates evidencing the
Equitex Preferred Stock pursuant to Section 2.10 and (d) the Sellers will
deliver certificates evidencing the Target Shares to XX.xxx for cancellation.
SECTION 2.5 CERTIFICATE OF MERGER. Simultaneously with or promptly
after the execution of this Agreement, an executed original Certificate of
Merger (the "Certificate of Merger") shall be filed with the Secretary of State
of Delaware and the Secretary of State of New York in accordance with the DGCL
and the New York Business Corporation Law, as amended in the form attached
hereto as Exhibit A.
SECTION 2.6 EFFECTIVE TIME.
(a) The Merger shall become effective at the Effective Time and shall
have the effect set forth in the DGCL. The Surviving Corporation may, at any
time after the Effective Time, take any action (including executing and
delivering any document) in the name and on behalf of either the Target or
XX.xxx in order to carry out and effectuate the transactions contemplated by
this Agreement.
(b) From and after the Effective Time, the separate corporate existence
of XX.xxx with its purpose, object, rights, privileges, powers, certificates and
franchises, shall continue unimpaired by the Merger. At the Effective Time, the
separate corporate existence of the Target shall cease, and XX.xxx shall succeed
to all the properties and assets of the Target and to all debts, choses in
action and other interests due or belonging to the Target and shall be subject
to, and responsible for, all Liabilities of the Target with the effects provided
by the applicable provisions of the DGCL.
SECTION 2.7 CERTIFICATE OF INCORPORATION. The certificate of
incorporation of XX.xxx in effect at and as of the Effective Time will remain
the certificate of incorporation of the Surviving Corporation without any
modification or amendment in the Merger.
SECTION 2.8 BYLAWS. The bylaws of XX.xxx in effect at and as of the
Effective Time will remain the bylaws of the Surviving Corporation without any
modification or amendment in the Merger.
SECTION 2.9 DIRECTORS AND OFFICERS. The directors and officers of
XX.xxx in office at and as of the Effective Date will remain the directors and
officers of the Surviving Corporation (retaining their respective positions and
terms of office).
SECTION 2.10 ISSUE OF PREFERRED STOCK TO THE SELLERS.
(a) At and as of the Effective Time, Equitex shall issue to Meridian
FOUR HUNDRED TWENTY-FIVE THOUSAND (425,000) shares of Series F Preferred Stock
of Equitex, par value
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$0.01 per share ("Equitex Preferred Stock"). The terms of the Equitex Preferred
Stock to be issued shall be included in a Certificate of Designation in the form
attached hereto as Exhibit B.
(b) Sixty (60) days following each of the first five (5) anniversaries
of the Closing, Equitex shall issue to Meridian shares of Equitex Common Stock
having a Market Value (as defined below) equal to twenty percent (20%) of the
increase in the annual pre-tax net earnings of the Target's business for the
most recently completed fiscal year over the pre-tax net earnings of the
Target's business for the immediately preceding fiscal year (i.e., the pre-tax
net earnings for the fiscal year ended December 31, 2000, on an annualized
basis, shall be compared with the pre-tax earnings for the fiscal year ended
February 29, 2000; the increase in pre-tax net earnings for the fiscal year
ended December 31, 2001 shall be compared with the pre-tax earnings for the
fiscal year ended December 31, 2000 and so on). In no event will the maximum
number of shares of Equitex Common Stock that shall be delivered pursuant to
this Section 2.10(b) exceed that number, the aggregate Market Value of which, as
determined for each issue of such shares pursuant to Section 2.10(b) at the time
of issuance, is THREE MILLION FOUR HUNDRED THOUSAND DOLLARS ($3,400,000.00).
"Market Value" shall mean the average closing price of the shares of Equitex on
the Nasdaq automated quotation system, for the twenty (20) days prior to the
Closing (or the anniversary of the Closing described in this Section).
SECTION 2.11 CLOSING OF TRANSFER RECORDS. After the close of business
on the Closing Date, transfers of Target Shares outstanding prior to the
Effective Time shall not be made on the stock transfer books of the Surviving
Corporation.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLERS AND THE TARGET
SECTION 3.1 REPRESENTATIONS AND WARRANTIES REGARDING THE SELLERS AND
THE TARGET. As a material inducement to Equitex and XX.xxx to enter into this
Agreement and consummate the transactions contemplated hereby, each of the
Sellers and the Target, jointly and severally represent and warrant to Equitex
and XX.xxx that:
(a) ORGANIZATION; QUALIFICATION; AUTHORIZATION; NO BREACH. The Target
is a corporation duly organized, validly existing and in good standing under the
laws of the State of New York and has all requisite corporate power and
authority to own or hold under lease its properties and assets and to carry on
its business as now conducted. The Target is duly authorized to conduct business
and is in good standing under the laws of each jurisdiction where such
qualification is required, except where the lack of such qualification would not
have a Material Adverse Effect on the Target. True and complete copies of the
certificate of incorporation, as amended to date, and the bylaws, as amended to
date, of the Target have been furnished to Equitex. The minute books and
ownership record books of the Target containing minutes of director and member
meetings and transfer and ownership records are complete and correct in all
material respects. The execution, delivery and performance of this Agreement has
been duly authorized by the Sellers and the Target. This Agreement constitutes a
valid and binding obligation of the Sellers and the Target, enforceable in
accordance with its terms except (i) as such enforceability may be limited by
bankruptcy, insolvency, moratorium, reorganization and other similar laws
affecting creditors' rights generally,
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and (ii) as such enforceability may be limited by general principles of equity,
regardless of whether asserted in a proceeding in equity or law. The fulfillment
of and compliance with the respective terms of this Agreement by the Sellers and
the Target, does not and shall not (1) conflict with or result in a breach of
the terms, conditions or provisions of, (2) constitute a default under, (3)
result in the creation of any Liens upon the capital stock, membership interests
or assets to, (4) give any third party the right to modify, terminate or
accelerate any obligation under, (5) result in a violation of, or require any
authorization, consent, approval, exemption or other action by or notice, or
declaration to, or filing with, any court or administrative or governmental body
or agency pursuant to, any law, statute, rule, regulation, order, judgment or
decree to which the Sellers or the Target are subject, or any material agreement
or instrument to which the Sellers or the Target are a party or otherwise bound.
(b) COMPLIANCE WITH LAWS. The Target has complied in all material
respects with all applicable laws (including rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings, and charges thereunder) of
federal, state, local and foreign governments (and all agencies thereof), and no
action, suit, proceeding, hearing, investigation, charge, complaint, claim,
demand or notice has been filed or commenced against any of them alleging any
failure so to comply.
(c) CAPITALIZATION. The authorized capital stock of the Target consists
of two thousand (2,000) shares of common stock, par value $0.01 per share
("Target Common Stock"), of which two thousand (2,000) shares are outstanding as
of the date hereof. Each of such outstanding shares of Target Common Stock is
duly authorized, validly issued, fully paid and nonassessable and was not issued
in violation of any applicable law or of any preemptive right of stockholders.
All Persons who own of record or beneficially any class or series of capital
stock of the Target are set forth on SCHEDULE 3.1(C). Except for this Agreement
and as set forth on SCHEDULE 3.1(C), there is no commitment, plan or arrangement
to issue, and no outstanding option, warrant or other right calling for the
issuance of, any share of capital stock of the Target or any security or other
instrument convertible into, exercisable for or exchangeable for capital stock
of the Target. Except as set forth on SCHEDULE 3.1(C), there is no outstanding
security or other instrument convertible into or exchangeable for capital stock
of the Target.
(d) TITLE TO ASSETS. The Target has good and marketable title to, or a
valid leasehold interest in, all of the assets set forth on SCHEDULE 3.1(D)(I),
free and clear of any Lien, any conditional sale or other title retention
agreement or lease in the nature thereof, any sale of receivables with recourse
against the Target, any filing or agreement to file a financing statement as
debtor under the Uniform Commercial Code or any similar statute other than to
reflect ownership by a third party of property leased to the Target under a
lease which is not in the nature of a conditional sale or title retention
agreement, or any subordination arrangement in favor of another Person, except
for the Liens listed on SCHEDULE 3.1(D)(II).
(e) SUBSIDIARIES. The Target has no Subsidiaries.
(f) THE TARGET'S FINANCIAL STATEMENTS. Attached hereto as SCHEDULE
3.1(F) are the statements of income and expense (cash basis) of the Target for
the twelve (12) months ended February 29, 2000. The foregoing financial
statements (the "Target's Financial Statements") (including in all cases the
notes thereto, if any) were compiled from the books and records of the
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Target and present fairly, in all material respects, the results of operations
and cash flows of the Target as of and for the period covered thereby.
(g) NO MATERIAL ADVERSE CHANGE. Since February 29, 2000, there has been
no Material Adverse Change in the financial condition, operating results or
assets taken as a whole of the Target.
(h) BROKERS' FEES. Neither the Sellers nor the Target has any liability
or obligation to pay any fees or commissions to any broker, finder or agent with
respect to the transactions contemplated by this Agreement.
(i) TAX MATTERS.
(i) The Target has filed all material federal, state or city
returns, declarations, reports, claims for refund or information
returns or statements relating to federal, state, local or foreign
income (including taxes under the Code) or other tax of any kind
whatsoever, including any interest, penalty or addition thereto,
whether disputed or not ("Taxes") including any schedule or attachment
thereto, and including any amendment thereof ("Tax Returns") that it
was required to file. All such Tax Returns were correct and complete in
all material respects. All Taxes owed by the Target (whether or not
shown on any Tax Returns) have been paid other than those not yet due
and payable. No claim has ever been made by an authority in a
jurisdiction where the Target does not file Tax Returns that the Target
is or may be subject to taxation by that jurisdiction. There are no
Liens on any of the assets of the Target that arose in connection with
any failure (or alleged failure) to pay any Taxes.
(ii) The Target has withheld and paid all material Taxes
required to have been withheld and paid in connection with amounts paid
or owing to any employee or independent contractor of the Target.
(iii) There is no dispute or claim concerning any liability
for Taxes of the Target either (1) claimed or raised by any authority
in writing or (2) to the Knowledge of the Sellers or the Target, based
upon contact with any agent of such authority.
(iv) To the Knowledge of the Sellers and the Target, the
Target has not waived any statute of limitations in respect of Taxes or
agreed to any extension of time with respect to assessment or
deficiency of Taxes.
(j) REAL PROPERTY.
(i) SCHEDULE 3.1(J) sets forth a complete and correct list of
all real property or premises used by the Target that are leased in
whole or in part by the Target. Complete and correct copies of all
leases, subleases, guarantees of lease, guarantees of sublease and
other documents concerning such real property and the interests of the
Target therein have been made available to Equitex and XX.xxx.
(ii) Except as noted on SCHEDULE 3.1(J), with respect to each
lease and sublease listed on SCHEDULE 3.1(J):
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(1) The lease or sublease is valid, binding,
enforceable (except as such enforceability may be limited by
bankruptcy, insolvency, moratorium, reorganization and other
similar laws affecting creditors' rights generally) and in
full force and effect;
(2) The lease or sublease will continue to be valid,
binding, enforceable and in full force and effect on identical
terms following the consummation of the transactions
contemplated hereby subject to obtaining any necessary
consents to the transfer of such leases;
(3) Neither the Target nor any third party to the
lease or sublease is in material breach or material default
thereof, and no event has occurred which, with notice or lapse
of time, would constitute a material breach or material
default or permit termination, modification or acceleration
thereunder;
(4) There are no material disputes, oral agreements
or forbearance programs in effect as to the lease or sublease;
and
(5) Except as part of the transactions contemplated
hereby, the Target has not assigned, transferred, conveyed,
mortgaged, deeded in trust or encumbered any interest in the
leasehold or subleasehold other than customary landlord Liens.
(k) CONTRACTS.
(i) SCHEDULE 3.1(K) hereto lists the contracts and other
agreements relating to the Target to which the Target is a party and
which will be assigned to or assumed by XX.xxx.
(ii) Other than as disclosed in SCHEDULE 3.1(K), there are no
other contracts or other agreements to which the Target is a party
which are or will be material to the ability of XX.xxx to carry on the
business of the Target.
The Sellers and the Target have delivered or made available to Equitex and
XX.xxx a correct and complete copy of each written agreement listed on Schedule
3.1(k). With respect to each such agreement: (A) the agreement is valid,
binding, enforceable (except as may be limited by bankruptcy, insolvency,
moratorium, reorganization and other laws which limit generally creditors'
rights and subject further to limitations on equitable remedies) and in full
force and effect; (B) the agreement will continue to be valid, binding,
enforceable (except as may be limited by bankruptcy, insolvency, moratorium,
reorganization and other laws which limit generally creditors' rights and
subject further to limitations on equitable remedies) and in full force and
effect on identical terms following the consummation of the transactions
contemplated hereby and subject to obtaining necessary consents to transfer or
assignment; (C) neither the Target nor, to the Knowledge of the Sellers or the
Target, any other party is in material breach or material default, and no event
has occurred which with notice or lapse of time would constitute a material
breach or material default or permit termination, modification or acceleration,
under the agreement; and (D) neither the Target nor, to the Knowledge of the
Sellers or the Target, any other party has repudiated any material provision of
the agreement.
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(l) LITIGATION. SCHEDULE 3.1(L) hereto sets forth each instance in
which the Target (i) is subject to any outstanding injunction, judgment, order,
decree, ruling or charge or (ii) is a party or is threatened to be made a party
to any action, suit, proceeding, hearing or investigation of, in, or before any
court or quasi-judicial or administrative agency of any federal, state, local or
foreign jurisdiction or before any arbitrator which, (A) is related to the
business of the Target and (B) if determined adversely to the Target, would
result in the payment of damages or other monies in excess of TWENTY-FIVE
THOUSAND DOLLARS ($25,000.00) in the aggregate.
(m) LABOR MATTERS. Except as set forth on Schedule 3.1(m) hereto, the
Target is not a party to any collective bargaining agreement or any employment,
consulting or similar agreement relating to the business of the Target or any
agreement or arrangement providing for severance payments to any employee of the
Target upon termination of employment or which provides benefits upon a change
in control of the Target. There is no claim, complaint or charge made or, to the
Knowledge of the Sellers or the Target, threatened for any unfair labor
practice, charge or complaint against the Target.
(n) EMPLOYEE BENEFITS.
(i) The Target does not maintain and has not maintained or
contributed or has not been required to contribute to any: (A)
nonqualified deferred or retirement plan or arrangement which is an
"Employee Pension Benefit Plan" (under ERISA ss.3(2)), (B) qualified
defined contribution retirement plan or arrangement which is an
Employee Pension Benefit Plan, (C) qualified defined benefit retirement
plan or arrangement which is an Employee Pension Benefit Plan
(including any "Multiemployer Plan" under ERISA ss.3(37)) or (D)
"Employee Welfare Benefit Plan" (under ERISA ss.3(1)) or material
fringe benefit plan or program.
(ii) The Target does not contribute to, has not contributed
to, and has not been required to contribute to any Multiemployer Plan
and does not have any Liabilities (including withdrawal Liabilities)
under any Multiemployer Plan.
(iii) The Target does not maintain and has not maintained or
contributed or has not been required to contribute to any Employee
Welfare Benefit Plan providing medical, health or life insurance or
other welfare-type benefits for current or future retired or terminated
employees, their spouses or their dependents (other than (A) in
accordance with ss.4980B of the Code or (B) coverage mandated by
applicable laws).
(o) PATENTS, TRADEMARKS AND LICENSES. Except as disclosed in SCHEDULE
3.1(O)(I), the Sellers own, possess or have licenses or similar rights to
utilize all patents, trademarks, domain or trade names, service marks,
franchises and technology necessary for the conduct of the Target's business as
presently conducted without any infringement of or conflict with the rights of
others. All such patents, trademarks, domain or trade names, service marks and
franchises or applications therefor, are disclosed in SCHEDULE 3.1(O)(I), and
all licenses therefore are disclosed in SCHEDULE 3.1(O)(II), and the Target's
interests therein are similarly disclosed. Neither the consummation of the
transactions contemplated by this Agreement will terminate or alter Equitex's
ability to utilize the above described rights or the terms of such use.
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(p) TARGET CAPITAL STOCK. All of the issued and outstanding capital
stock of the Target shall be owned by the Sellers free and clear of any Lien.
Each of such outstanding capital stock of the Target will be duly authorized,
validly issued, fully paid and nonassessable and will not be issued in violation
of any applicable law or of any preemptive right of stockholders. Except for
this Agreement, there is no commitment, plan, or arrangement to issue, and no
outstanding option, warrant or other right calling for the issuance of, any
share of capital stock of the Target or any security or other instrument
convertible into, exercisable for or exchangeable for capital stock of the
Target. There is no outstanding security of the Sellers or other instrument
convertible into or exchangeable for capital stock of the Target.
(q) GOVERNMENTAL PERMITS. Except as set forth on SCHEDULE 3.1(Q)(I),
the Target possesses all material governmental and regulatory permits, licenses,
consents, certificates, orders, authorizations and approvals (the "Governmental
Permits") necessary to own or hold under lease and operate its properties and
assets and to carry on its business as now conducted, including without
limitation any required by applicable mortgage, insurance, consumer finance,
environmental or other laws or regulations applicable to its business. All such
Governmental Permits are in full force and effect. Neither the Sellers nor the
Target has received any notice of proceedings relating to the revocation or
modification of any such Governmental Permits, which, singly or in the
aggregate, if the subject of an unfavorable ruling or finding, could have a
material adverse effect on the properties, assets, financial condition, results
of operation or business prospects of the Target. The Governmental Permits are
listed on SCHEDULE 3.1(Q)(II). The Target is operating in compliance in all
material respects with the provisions, terms and conditions of the Governmental
Permits, and to the best knowledge of the Sellers, none of the Governmental
Permits will be forfeited or terminated by, suspended or modified as a result
of, or will require the consent of any governmental entity to, the consummation
of the transactions contemplated hereby.
(r) DISCLOSURE. No representation or warranty of the Sellers or the
Target made hereunder or in the Schedules or in any certificate, statement or
other document delivered by or on behalf of the Sellers or the Target hereunder
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained herein or therein not
misleading. Copies of all documents referred to herein or in the Schedules have
been delivered or made available to Equitex and XX.xxx, are true, correct and
complete copies thereof, and include all amendments, supplements or
modifications thereto or waivers thereunder.
(s) SUPPLEMENTS TO EXHIBITS. From time to time prior to the Closing
Date, the Sellers and the Target will promptly supplement or amend any Schedules
provided for in this Agreement (i) if any matter arises hereafter which, if
existing or occurring at or prior to the date of this Agreement, would have been
required to be set forth or described in any such Schedule, or (ii) if it
becomes necessary to correct any information in any such Schedule which has
become inaccurate; provided, however, that no such supplement or amendment to
any Schedule shall be considered in determining satisfaction of the conditions
set forth in Section 5.1(b) of this Agreement.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF EQUITEX AND XX.XXX
SECTION 4.1 REPRESENTATIONS AND WARRANTIES OF EQUITEX AND XX.XXX.
Equitex and XX.xxx jointly and severally represent and warrant to the Sellers as
of the Closing as follows:
(a) ORGANIZATION; QUALIFICATION; AUTHORIZATION; NO BREACH. Each of
Equitex and XX.xxx is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has all requisite corporate
power and authority to own or hold under lease its properties and assets and to
carry on its business as now conducted. Each of Equitex and XX.xxx is duly
authorized to conduct business and is in good standing under the laws of each
jurisdiction where such qualification is required, except where the lack of such
qualification would not have a Material Adverse Effect on Equitex or XX.xxx.
True and complete copies of the certificate of incorporation, as amended to
date, and the bylaws, as amended to date, of each of Equitex and XX.xxx have
been furnished to the Target. The minute books and ownership record books of
Equitex and XX.xxx containing minutes of director and member meetings and
transfer and ownership records are complete and correct in all material
respects. The execution, delivery and performance of this Agreement has been
duly authorized by Equitex and XX.xxx. This Agreement constitutes a valid and
binding obligation of Equitex and XX.xxx, enforceable in accordance with its
terms except (i) as such enforceability may be limited by bankruptcy,
insolvency, moratorium, reorganization and other similar laws affecting
creditors' rights generally, and (ii) as such enforceability may be limited by
general principles of equity, regardless of whether asserted in a proceeding in
equity or law. The fulfillment of and compliance with the respective terms of
this Agreement by Equitex and XX.xxx and the Sellers, does not and shall not (A)
conflict with or result in a breach of the terms, conditions or provisions of,
(B) constitute a default under, (C) result in the creation of any Liens upon the
capital stock, membership interests or assets pursuant to, (D) give any third
party the right to modify, terminate or accelerate any obligation under, (E)
result in a violation of or require any authorization, consent, approval,
exemption or other action by or notice, or declaration to or filing with, any
court or administrative or governmental body or agency pursuant to, any law,
statute, rule, regulation, order, judgment or decree to which Equitex or XX.xxx
is subject or any material agreement or instrument to which Equitex or XX.xxx is
a party or otherwise bound.
(b) CAPITALIZATION.
(i) The authorized capital stock of Equitex consists of (1)
seven million five hundred thousand (7,500,000) shares of Equitex
Common Stock, par value $0.02 per share, of which seven million one
hundred six thousand nine hundred forty-three (7,106,943) shares are
outstanding as of the date hereof (excluding the shares to be delivered
to the Sellers) and (2) two million (2,000,000) shares of Equitex
Preferred Stock, par value $0.01 per share, of which one thousand four
hundred fifty (1,450) shares are outstanding as of the date hereof.
Each of such outstanding shares of Equitex Common Stock and each
outstanding share of Equitex Preferred Stock is duly authorized,
validly issued, fully paid and nonassessable, and was not issued in
violation of any applicable law or of any preemptive right of
stockholders. All Persons who own of record or beneficially five
percent (5%) or more of any class or series of capital stock of Equitex
are set forth on SCHEDULE 4.1(B)(I). Except for this Agreement and
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as set forth on SCHEDULE 4.1(B)(I), there is no commitment, plan or
arrangement to issue, and no outstanding option, warrant or other right
calling for the issuance of, any share of capital stock of Equitex or
any security or other instrument convertible into, exercisable for or
exchangeable for capital stock of Equitex. Except as set forth on
SCHEDULE 4.1(B)(I), there is no outstanding security or other
instrument convertible into or exchangeable for capital stock of
Equitex.
(ii) The authorized capital stock of XX.xxx consists of one
thousand (1,000) shares of common stock, par value $0.01 per share
("XX.xxx Common Stock"). Each of such outstanding shares of XX.xxx
Common Stock is duly authorized, validly issued, fully paid and
nonassessable, is owned of record and beneficially by Equitex, and was
not issued in violation of any applicable law or of any preemptive
right of stockholders. Except for this Agreement, there is no
commitment, plan or arrangement to issue, and no outstanding option,
warrant or other right calling for the issuance of, any share of
capital stock of XX.xxx or any security or other instrument convertible
into, exercisable for or exchangeable for capital stock of XX.xxx.
There is no outstanding security or other instrument convertible into
or exchangeable for capital stock of XX.xxx.
(c) FILINGS WITH THE SEC. Equitex has made all filings with the SEC
that it has been required to make under the Securities Act and the Exchange Act
(collectively, together with all of Equitex's voluntary filings with the SEC,
the "Public Reports"). Each of the Public Reports has complied with the
Securities Act and Exchange Act, as applicable, in all material respects. None
of the Public Reports, as of their respective dates, contained any untrue
statement of material fact or omitted to state a material fact necessary in
order to make the statements made therein, in light of the circumstances under
which they were made, not misleading. Equitex has delivered to the Sellers and
the Target a correct and complete copy of each Public Report (together with all
exhibits and schedules thereto and as amended to date).
(d) FINANCIAL STATEMENTS. Attached hereto as SCHEDULE 4.1(D) are the
audited statements of income of Equitex for the twelve (12) months ended
December 31, 1999 and the balance sheet of Equitex as at December 31, 1999. The
foregoing financial statements ("Equitex's Financial Statements") (including in
all cases the notes thereto, if any) are accurate and complete in all material
respects and present fairly, in all material respects, the results of operations
and cash flows of Equitex as of and for the period covered thereby.
(e) NO MATERIAL ADVERSE CHANGE. Since December 31, 1999, there has been
no Material Adverse Change in the financial condition, operating results or
assets taken as a whole of Equitex.
(f) LITIGATION. SCHEDULE 4.1(F) hereto sets forth each instance in
which Equitex or XX.xxx (i) is subject to any outstanding injunction, judgment,
order, decree, ruling or charge or (ii) is a party or is threatened to be made a
party to any action, suit, proceeding, hearing or investigation of, in, or
before any court or quasi-judicial or administrative agency of any federal,
state, local or foreign jurisdiction or before any arbitrator which, (1) is
related to the business of Equitex or XX.xxx and (2) if determined adversely to
Equitex or XX.xxx, would result in the payment of damages or other monies in
excess of TWENTY-FIVE THOUSAND DOLLARS ($25,000.00) in the aggregate.
11
(g) BROKERS' FEES. Equitex or XX.xxx does not have any liability or
obligation to pay any fees or commissions to any broker, finder or agent with
respect to the transactions contemplated by this Agreement.
ARTICLE V
CLOSING CONDITIONS
SECTION 5.1 CONDITIONS TO THE OBLIGATION OF EQUITEX AND XX.XXX TO
CONSUMMATE THE TRANSACTIONS TO BE CONSUMMATED HEREUNDER AT THE CLOSING. The
obligations of Equitex and XX.xxx to consummate the transactions to be
consummated hereunder at the Closing are subject to the following conditions
(unless waived by both Equitex and XX.xxx in their discretion):
(a) NO ADVERSE CHANGE. No Material Adverse Change shall have occurred
in the business or financial condition of the Target.
(b) ACCURACY OF REPRESENTATIONS AND COMPLIANCE WITH CONDITIONS. All
representations and warranties of the Sellers and the Target contained in
Article III of this Agreement shall be true and correct as of the Closing; as of
the Closing, the Sellers and the Target shall have performed and complied with
all covenants and agreements and satisfied all conditions required to be
performed and complied with by the Sellers and the Target at or before such time
by this Agreement; and Equitex and XX.xxx shall have received a certificate
executed by an officer of the Target, dated the Closing, to that effect,
substantially in the form of Exhibit C.
(c) OTHER CLOSING DOCUMENTS. The Sellers shall have delivered to
Equitex and XX.xxx at or prior to the Closing such other documents, as Equitex
and XX.xxx may reasonably request in order to enable Equitex and XX.xxx to
determine whether the conditions to its obligations under this Agreement have
been met and otherwise to carry out the provisions of this Agreement.
(d) LEGAL ACTION. A party other than Equitex, XX.xxx or any of their
respective Affiliates shall not have instituted or threatened any legal
proceeding relating to or seeking to prohibit or otherwise challenge the
consummation of, the transactions contemplated by this Agreement or any of the
other agreements, instruments and other documents executed or to be executed and
delivered pursuant hereto or in connection therewith (collectively, and
including this Agreement, the "Operative Documents") or to obtain substantial
damages with respect thereto.
(e) NO GOVERNMENTAL ACTION. There shall not have been any action taken
or any law, rule, regulation, order or decree proposed, promulgated, enacted,
entered, enforced or deemed applicable to the transactions contemplated by the
Operative Documents, by any federal, state, local or other governmental
authority or by any court or other tribunal, including the entry of a
preliminary or permanent injunction, which, in the reasonable judgment of
Equitex and XX.xxx, (i) makes any of the transactions contemplated by this
Agreement illegal, (ii) results in a material delay in the ability of Equitex
and XX.xxx to consummate any of the transactions contemplated by this Agreement,
(iii) imposes limitations on the ability of XX.xxx effectively to exercise full
rights of ownership of the Target's business or (iv) otherwise prohibits,
restricts or materially delays consummation of any of the transactions
contemplated by this Agreement.
12
(f) CONTRACTUAL CONSENTS NEEDED. The Sellers and the Target shall have
obtained at or prior to the Closing all consents, if any, required for the
consummation of the transactions to be consummated hereunder at the Closing from
any party to any contract, agreement, instrument, lease, license, arrangement or
understanding to which the Sellers or the Target is a party or to which they or
their businesses, property or assets are subject or from any governmental body,
authority or tribunal.
(g) OPINION. The Buyer shall have received from Xxxxxxx Xxxxxxxx &
Xxxx, counsel to the Seller, an opinion of such counsel, dated the Closing Date,
with respect to the matters set forth in Section 3.1(a) and (c) and such other
matters as Equitex and XX.xxx or their counsel may reasonably request.
(h) OPERATING AGREEMENT. The Operating Agreement between the Target and
Meridian Capital Funding, Inc. dated as of September 7, 2000 ("the Operating
Agreement") attached in the form of Exhibit D hereto shall be in full force and
effect.
(i) OPERATING AGREEMENT LETTER. The Target shall have received a letter
from Xxxxxxx, Procter & Xxxx LLP regarding the Operating Agreement that is
reasonably satisfactory to Equitex and its counsel.
SECTION 5.2 CONDITIONS TO THE OBLIGATION OF THE SELLERS AND THE TARGET
TO CONSUMMATE THE TRANSACTIONS TO BE CONSUMMATED HEREUNDER AT THE CLOSING. The
obligations of the Sellers and the Target to consummate the transactions to be
consummated hereunder at the Closing are subject to the following conditions
(unless waived by the Sellers in their discretion):
(a) REGISTRATION RIGHTS AGREEMENT. Equitex shall enter into a
registration rights agreement with Meridian in the form attached hereto as
Exhibit E.
(b) CERTIFICATE OF DESIGNATION. Equitex shall have filed the
Certificate of Designation in the form attached hereto as Exhibit B with the
Secretary of State of the State of Delaware.
(c) NO ADVERSE CHANGE. No Material Adverse Change shall have occurred
in the business or financial condition of Equitex or XX.xxx.
(d) ACCURACY OF REPRESENTATIONS AND COMPLIANCE WITH CONDITIONS. All
representations and warranties of Equitex and XX.xxx contained in Article IV of
this Agreement shall be true and correct as of the Closing; as of the Closing,
Equitex and XX.xxx shall have performed and complied with all covenants and
agreements and satisfied all conditions required to be performed and complied
with by Equitex and XX.xxx at or before such time by this Agreement; and the
Sellers shall have received a certificate executed by an officer of Equitex,
dated the Closing, to that effect, substantially in the form of Exhibit F.
(e) OTHER CLOSING DOCUMENTS. Equitex and XX.xxx shall have delivered to
the Sellers and the Target at or prior to the Closing such other documents, as
the Sellers or the Target may reasonably request in order to enable the Sellers
and the Target to determine whether the conditions
13
to their obligations under this Agreement have been met and otherwise to carry
out the provisions of this Agreement.
(f) LEGAL ACTION. A party other than the Sellers, the Target or any of
their respective Affiliates shall not have instituted or threatened any legal
proceeding relating to or seeking to prohibit or otherwise challenge the
consummation of, the transactions contemplated by this Agreement or any of the
other agreements, instruments and other documents executed or to be executed and
delivered pursuant hereto or in connection therewith (collectively, and
including this Agreement, the "Operative Documents") or to obtain substantial
damages with respect thereto.
(g) NO GOVERNMENTAL ACTION. There shall not have been any action taken
or any law, rule, regulation, order or decree proposed, promulgated, enacted,
entered, enforced or deemed applicable to the transactions contemplated by the
Operative Documents, by any federal, state, local or other governmental
authority or by any court or other tribunal, including the entry of a
preliminary or permanent injunction, which, in the reasonable judgment of the
Sellers and the Target, (i) makes any of the transactions contemplated by this
Agreement illegal, (ii) results in a material delay in the ability of the
Sellers and the Target to consummate any of the transactions contemplated by
this Agreement, (iii) imposes limitations on the ability of the Sellers
effectively to exercise full rights of ownership of Equitex Preferred Stock or
Equitex Common Stock or (iv) otherwise prohibits, restricts or materially delays
consummation of any of the transactions contemplated by this Agreement.
(h) CONTRACTUAL CONSENTS NEEDED. The Sellers and the Target shall have
obtained on or prior to the Closing all consents required for the consummation
of the transactions to be consummated hereunder at the Closing from any party to
any contract, agreement, instrument, lease, license, arrangement or
understanding to which the Sellers are a party or to which they or any of their
businesses, property or assets are subject or of any governmental body,
authority or tribunal.
(i) CAPITAL CONTRIBUTION TO XX.XXX. At and as of the Effective Time,
Equitex shall make a capital contribution of TWO HUNDRED TWENTY-FIVE THOUSAND
DOLLARS ($225,000.00) to XX.xxx and shall provide evidence thereof satisfactory
to the Sellers.
ARTICLE VI
POST-CLOSING
SECTION 6.1 STAND ALONE OPERATION. Equitex shall operate XX.xxx as a
stand alone operation for at least two (2) years following the Closing. For at
least five (5) years following the Closing, Equitex shall deliver to the Sellers
monthly and annual financial information and reports related to the operations
and financial condition of the business of XX.xxx, in such form as shall permit
the Sellers to ascertain the pre-tax net earnings of XX.xxx's business in
accordance with Section 2.10(b) of this Agreement. XX.xxx shall apply for and
use its best efforts to obtain a New York residential mortgage brokerage license
within a reasonable period of time following the Closing, and such license shall
only be used in connection with the business conducted by the Target immediately
prior to the Closing. Notwithstanding the foregoing, nothing shall prohibit
XX.xxx from obtaining and operating under residential or other mortgage
brokerage licenses in any other jurisdiction.
14
ARTICLE VII
INDEMNIFICATION
SECTION 7.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The respective
representations and warranties of the Parties contained herein or in any
certificates or other documents delivered prior to or at the Closing shall not
be deemed waived or otherwise affected by any investigation made by any Party
hereto. The representations and warranties provided for in this Agreement shall
survive for eighteen (18) months beyond the Closing, except that (a) the
representations and warranties in Section 3.1(i) shall survive until six (6)
months after the end of the applicable statute of limitations and (b) the
representations and warranties contained in Sections 3.1(a), 3.1(p) and 4.1(a)
shall survive forever (the foregoing periods being referred to as, collectively,
the "Survival Periods"); PROVIDED, HOWEVER, that in the event that any Party
hereto makes a claim for a breach of a representation or warranty under this
Section 7.1 prior to the last day of the applicable Survival Period, such
representation and warranty shall survive until final disposition of such claim.
The provisions of this Section 7.1 shall not limit any covenant or agreement of
the Parties hereto (and the covenants and agreements of the Parties hereto shall
survive forever).
SECTION 7.2 INDEMNIFICATION OBLIGATIONS OF THE SELLERS.
(a) Subject to the Survival Periods, the Sellers will indemnify
Equitex, XX.xxx and their respective Affiliates, stockholders, officers,
directors, employees, agents, representatives and successors and assigns
(collectively, the "Equitex Indemnitees") in respect of, and save and hold each
of the Equitex Indemnitees harmless against and pay on behalf of or reimburse
each of the Equitex Indemnitees as and when incurred, any claims, Liabilities,
losses, damages, deficiencies, assessments, judgments, remediations and costs or
expenses (including reasonable attorneys', consultants' and experts' fees and
expenses incurred in connection therewith) ("Losses") which any of the Equitex
Indemnitees suffers, sustains or becomes subject to as a result of or by virtue
of, without duplication:
(i) any facts or circumstances that constitute a breach of
representation or warranty of the Sellers or the Target set forth in
this Agreement or any certificate delivered pursuant to this Agreement;
or
(ii) any nonfulfillment or breach of any covenant or agreement
of the Sellers or the Target, set forth in this Agreement.
(b) The Sellers and the Target acknowledge that the agreement contained
in this Section 7.2 is an integral part of the transactions contemplated by this
Agreement and that, without such agreement, Equitex and XX.xxx would not enter
into this Agreement. Accordingly, if the Sellers fail to pay promptly the
amounts due pursuant to this Section 7.2 and, in order to obtain such amounts,
Equitex or XX.xxx commences a suit against the Sellers to collect the amounts
provided for herein, the Sellers shall also be liable to pay to Equitex and
XX.xxx their reasonable costs and expenses (including reasonable attorneys'
fees) in connection with such suit if Equitex or XX.xxx prevails therein.
15
SECTION 7.3 INDEMNIFICATION OBLIGATIONS OF EQUITEX AND XX.XXX.
(a) Subject to the Survival Periods, Equitex and XX.xxx will indemnify
the Sellers and their respective agents, representatives and successors and
assigns (collectively, the "Sellers Indemnitees") in respect of, and save and
hold each of the Sellers Indemnitees harmless against and pay on behalf of or
reimburse each of the Sellers Indemnitees as and when incurred, any claims,
Liabilities, losses, damages, deficiencies, assessments, judgments, remediations
and costs or expenses (including reasonable attorneys', consultants' and
experts' fees and expenses incurred in connection therewith) ("Losses") which
any of the Sellers Indemnitees suffers, sustains or becomes subject to as a
result of or by virtue of, without duplication:
(i) any facts or circumstances that constitute a breach of
representation or warranty of Equitex or XX.xxx set forth in this
Agreement or any certificate delivered pursuant to this Agreement; or
(ii) any nonfulfillment or breach of any covenant or agreement
of Equitex or XX.xxx, set forth in this Agreement.
(b) Equitex and XX.xxx acknowledge that the agreement contained in this
Section 7.3 is an integral part of the transactions contemplated by this
Agreement and that, without such agreement, the Sellers and the Target would not
enter into this Agreement. Accordingly, if Equitex or XX.xxx fails to pay
promptly the amounts due pursuant to this Section 7.3 and, in order to obtain
such amounts, the Sellers commence a suit against Equitex or XX.xxx to collect
the amounts provided for herein, Equitex and XX.xxx shall also be liable to pay
to the Sellers their reasonable costs and expenses (including reasonable
attorneys' fees) in connection with such suit if the Sellers prevail therein.
SECTION 7.4 INDEMNIFICATION PROCEDURES.
(a) Any Person making a claim for indemnification pursuant to Section
7.2 or 7.3 above (each, an "Indemnified Party") must give the Party from whom
indemnification is sought (an "Indemnifying Party") written notice of such claim
(an "Indemnification Claim Notice") promptly after the Indemnified Party
receives any written notice of any action, lawsuit, proceeding, investigation or
other claim (a "Proceeding") against or involving the Indemnified Party by any
Person or otherwise discovers the liability, obligation or facts giving rise to
such claim for indemnification; provided however, that the failure to notify or
delay in notifying an Indemnifying Party will not relieve the Indemnifying Party
of its obligations pursuant to Section 7.2 or 7.3 above, as applicable, except
to the extent that such failure actually xxxxx the Indemnifying Party (it being
understood that any claim for indemnity pursuant to Section 7.2 or 7.3 above
must be made by notice given within the applicable Survival Period. Such notice
must contain a description of the claim and the nature and amount of such Loss
(to the extent that the nature and amount of such Loss is known at such time).
(b) With respect to the defense of any Proceeding against or involving
an Indemnified Party in which any Person in question seeks only the recovery of
a sum of money for which indemnification is provided in Section 7.2 or 7.3
above, at its option an Indemnifying Party may appoint as lead counsel of such
defense any legal counsel selected by the Indemnifying Party; provided, that
before the Indemnifying Party assumes control of such defense it must first:
16
(i) enter into an agreement with the Indemnified Party (in
form and substance reasonably satisfactory to the Indemnified Party)
pursuant to which the Indemnifying Party agrees to be fully responsible
(with no reservation of any rights other than the right to be
subrogated to the rights of the Indemnified Party) for all Losses
relating to such Proceeding and unconditionally guarantees the payment
and performance of any liability or obligation which may arise with
respect to such Proceeding or the facts giving rise to such claim for
indemnification; and
(ii) furnish the Indemnified Party with evidence that the
Indemnifying Party, in the Indemnified Party's reasonable judgment, is
and will be able to satisfy any such liability.
(c) Notwithstanding Sections 7.2(b) and 7.3(b) above, (i) the
Indemnified Party will be entitled to participate in the defense of such claim
and to employ counsel of its choice for such purpose at its own expense
(PROVIDED, HOWEVER, that the Indemnifying Party will bear the reasonable fees
and expenses of such separate counsel incurred prior to the date upon which the
Indemnifying Party effectively assumes control of such defense), and (ii) the
Indemnifying Party will not be entitled to assume control of the defense of such
claim and will pay, the reasonable fees and expenses of one legal counsel
retained by the Indemnified Party (and such local counsel as may be required),
if:
(A) the Indemnified Party reasonably believes that
there exists or could arise a conflict of interest which,
under applicable principles of legal ethics, could prohibit a
single legal counsel from representing both the Indemnified
Party and the Indemnifying Party in such Proceeding; or
(B) a court of competent jurisdiction rules that the
Indemnifying Party has failed or is failing to prosecute or
defend vigorously such claim.
(d) The Indemnifying Party must obtain the prior written consent of the
Indemnified Party (which the Indemnified Party will not unreasonably withhold)
prior to entering into any settlement of such claim or Proceeding or ceasing to
defend such claim or Proceeding; provided that in the case where the Indemnified
Party is in control of the defense of the claim or Proceeding, the Indemnified
Party must obtain the consent of the Indemnifying Party (which consent will not
be unreasonably withheld) prior to entering into any such settlement or ceasing
to defend such claim or Proceeding.
(e) Notwithstanding any other provision hereof, an Indemnifying Party
shall not be liable under Section 7.2 or 7.3, as the case may be, for any claims
sustained by the Indemnified Party pursuant to Section 7.2 or 7.3 hereof, as
applicable, unless and until the aggregate amount of all such claims sustained
by the Indemnified Party shall exceed ONE HUNDRED THOUSAND DOLLARS
($100,000.00).
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 NOTICES. All notices, communications and deliveries
hereunder shall be made in writing signed by the Party making the same, shall
specify the Section hereunder pursuant to which it is given or being made and
shall be deemed given or made on (a) the date delivered if
17
delivered in person or sent by facsimile or (b) the first business day after the
date it is sent by a nationally recognized courier (with delivery and other fees
prepaid) as follows:
To the Sellers or the Target:
----------------------------
Meridian Capital Group, LLC
0000 Xxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxxxxx
Fax: (000) 000-0000
Confirmation No.: (000) 000-0000
With a copy to:
--------------
Xxxxxxx Xxxxxxxx & Wood
Two World Trade Center
New York, New York 10048
Attn: Xxxxxx X. X. Xxxx
Fax: (000) 000-0000
To Equitex or XX.xxx:
--------------------
Equitex, Inc.
Xxxxx 000
0000 XXX Xxxx.
Xxxx Xxxxx Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxx Xxxx
Fax: (000) 000-0000
With a copy to:
--------------
Boodell LeBaron & Xxxxxx, LLC
000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: C. Xxxxxxxxx XxXxxxx, Xx.
Fax: (000) 000-0000
or to such other representative or at such other address of a Party as such
Party hereto may furnish to the other Parties in writing.
SECTION 8.2 COMPUTATION OF TIME. Whenever the last day for the exercise
of any privilege or the discharge of any duty hereunder shall fall upon a
Saturday, Sunday or any date on which banks in New York are authorized to be
closed, the Party having such privilege or duty may exercise such privilege or
discharge such duty on the next succeeding day which is a regular business day.
18
SECTION 8.3 NUMBER; GENDER. Whenever the context so requires, the
singular shall include the plural and the plural shall include the singular, and
the gender of any pronoun shall include the other genders.
SECTION 8.4 CAPTIONS. The titles, captions and table of contents
contained in this Agreement are inserted herein only as a matter of convenience
and for reference and in no way define, limit, extend or describe the scope of
this Agreement or the intent of any provision hereof. Unless otherwise specified
to the contrary, all references to Articles and Sections are references to
Articles and Sections of this Agreement and all references to Exhibits and
Schedules are references to Exhibits and Schedules to this Agreement.
SECTION 8.5 FURTHER ACTIONS. At any time and from time to time, each
Party agrees, at its expense, to take such actions and to execute and deliver
such documents as may be reasonably necessary to effectuate the purposes of this
Agreement.
SECTION 8.6 EXHIBITS AND SCHEDULES. All Exhibits and Schedules attached
hereto or other documents expressly incorporated into this Agreement, are hereby
incorporated into this Agreement and are hereby made a part hereof as if set out
in full in this Agreement.
SECTION 8.7 WAIVER. Any waiver by any Party of a breach of any term of
this Agreement shall not operate as or be construed to be a waiver of any other
breach of that term or of any breach of any other term of this Agreement. The
failure of a Party to insist upon strict adherence to any term of this Agreement
on one or more occasions will not be considered a waiver or deprive that Party
of the right thereafter to insist upon strict adherence to that term or any
other term of this Agreement. Any waiver must be in writing.
SECTION 8.8 SURVIVAL. The covenants, agreements, representations and
warranties contained in or made pursuant to this Agreement shall survive the
Closing and any delivery of any consideration by Equitex, irrespective of any
investigation made by or on behalf of any Party.
SECTION 8.9 SEVERABILITY. Any provision hereof which is prohibited or
unenforceable in any jurisdiction will, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction will not invalidate or render unenforceable such provision in any
other jurisdiction. To the extent permitted by law, the Parties hereto waive any
provision of law which renders any such provision prohibited or unenforceable in
any respect.
SECTION 8.10 ASSIGNMENT; SUCCESSORS IN INTEREST. Except as otherwise
provided herein, this Agreement may not be assigned by operation of law or
otherwise, and any attempted assignment shall be null and void. This Agreement
shall be binding upon and inure to the benefit of the Parties hereto and their
respective heirs, successors, assigns and legal representatives. This Agreement
shall be for the sole benefit of the Parties to this Agreement and their
respective heirs, successors, assigns and legal representatives and is not
intended, nor shall be construed, to give any Person, other than the Parties
hereto and their respective heirs, successors, assigns and legal
representatives, any legal or equitable right, remedy or claim hereunder.
19
SECTION 8.11 INTEGRATION; AMENDMENT. This Agreement supersedes all
negotiations, agreements and understandings among the Parties with respect to
the subject matter hereof and constitutes the entire agreement among the Parties
hereto. This Agreement may be amended by the Parties hereto by or pursuant to
action taken at any time before or after the Closing. Without limiting the
foregoing, this Agreement may not be amended, modified or supplemented except by
written agreement of the Parties hereto.
SECTION 8.12 COUNTERPARTS. This Agreement may be executed in two (2) or
more counterparts, each of which shall be deemed an original and which together
shall constitute one (1) instrument.
SECTION 8.13 SPECIFIC PERFORMANCE AND OTHER REMEDIES. Each of the
Parties hereto acknowledges that the rights of each Party to consummate the
transactions contemplated hereby are special, unique and of extraordinary
character, and that, in the event that any Party violates or fails or refuses to
perform any covenant or agreement made by it herein, the non-breaching Party may
be without an adequate remedy at law. Therefore, the Parties each agree that in
the event that any other Party violates or fails or refuses to perform any
covenant or agreement made by such Party herein, the non-breaching Party or
Parties may, subject to the terms of this Agreement and in addition to any
remedies at law for damages or other relief, institute and prosecute an action
in any court of competent jurisdiction to enforce specific performance of such
covenant or agreement or seek any other equitable relief.
SECTION 8.14 EXPENSES. Each Party shall bear its own costs and expenses
(including all legal, accounting, investment banking and other costs) with
respect to this Agreement.
SECTION 8.15 TRANSFER TAXES. The Sellers shall be liable for and shall
pay when due, any transfer, gains, documentary, sales, use, registration, stamp,
value added or other similar Taxes payable by reason of the transactions
contemplated by this Agreement, and the Sellers shall, at their own expense,
file all necessary Tax Returns and other documentation with respect to all such
Taxes.
SECTION 8.16 GOVERNING LAW. This Agreement shall be governed and
construed in accordance with the laws of the State of Delaware, without giving
effect to any choice of law or conflict of law provision or rule (whether of the
State of Delaware or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of Delaware.
SECTION 8.17 WAIVER OF JURY TRIAL. Each of the Parties hereto hereby
waives, to the extent permitted by applicable law, trial by jury in any
litigation in any court with respect to, in connection with or arising out of
this Agreement or the validity, interpretation or enforcement hereof and agrees
that this Section 8.17 is a specific and material aspect of this Agreement and
acknowledges that the Parties hereto would not enter into this Agreement if this
Section 8.17 were not part of this Agreement.
SECTION 8.18 CONFIDENTIALITY. Except as may be required by the
provisions of applicable law and regulation, the Parties hereto agree that they
will not disclose to any other Person the fact that this Agreement has been
entered into thereby or any of the terms, conditions or other
20
facts with respect thereto provided that in the event a Party hereto deems
disclosure is required in order that it not commit a violation of law or
regulation, it shall use its best efforts to discuss in advance with counsel to
the non-disclosing Party the requirement to make, and the substance of, such
disclosure.
SECTION 8.19 PUBLICITY. No notices to third parties or other publicity,
including press releases, concerning any of the transactions provided for herein
shall be made by any Party hereto unless planned and coordinated jointly among
the Parties hereto, except to the extent otherwise required by law.
21
IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of
the date first written above.
/s/ Xxxxxx X. Xxxxxxxxx
-----------------------------------
Xxxxxx X. Xxxxxxxxx
/s/ Xxxxx Xxxxxxx
-----------------------------------
Xxxxx Xxxxxxx
EQUITEX, INC.
By: /s/ Xxxxx Xxxx
-------------------------------
Name: Xxxxx Xxxx
Title: President
XX.XXX, INC.
By: /s/ Xxxxx Xxxx
-------------------------------
Name: Xxxxx Xxxx
Title: President
MERIDIAN CAPITAL GROUP, LLC
By: /s/ Xxxxxx X. Xxxxxxxxx
-------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Chairman
THE MERIDIAN RESIDENTIAL GROUP, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
-------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Chairman
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