EXHIBIT 10.30
EXECUTION COPY
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SECURITIES PURCHASE AGREEMENT
by and among
OLYMPIC CASCADE FINANCIAL CORPORATION,
XXXX XXXXXXXXXX
and
TRIAGE PARTNERS LLC
Dated as of DECEMBER 14, 2001
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SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of
December 14, 2001, by and among Olympic Cascade Financial Corporation, a
Delaware corporation, with headquarters located at 0000 0/xx/ Xxxxxx, Xxxxx
0000, Xxxxxxx, Xxxxxxxxxx 00000 (the "Company"), Xxxx Xxxxxxxxxx ("Xxxxxxxxxx")
and Triage Partners, LLC, a New York limited liability company ("Triage" and,
together with Xxxxxxxxxx, "Purchaser").
WHEREAS, the Company desires to sell 10,725 shares of Series A
convertible preferred stock, par value $.01 per share, of the Company (the
"Series A Preferred Stock"), and Purchaser desires to purchase the Series A
Preferred Stock, on the terms and subject to the conditions contained herein;
WHEREAS, simultaneous with the execution of this Agreement, Xxxxxxx X.
Xxxxxxx, Xxxxx Xx Xxxxxxxxx, Xxxxxxx X. Xxxxxx and Xxxxxxxx X. Xxxxxx
(collectively, the "Noteholders") are entering into an agreement to exchange
certain securities of the Company for 10,000 shares of Series A Preferred Stock
from the Company pursuant to a securities exchange agreement between the Company
and the Noteholders (the "Exchange Agreement"); and
WHEREAS, simultaneous with the execution of this Agreement, Purchaser
is entering into an agreement to acquire additional common stock of the Company
from Xxxxxx X. Xxxxxxxxx ("SAR") pursuant to a purchase agreement between Triage
and SAR (the "Xxxxxxxxx Purchase Agreement").
NOW, THEREFORE, in consideration of the promises and of the respective
representations, warranties, covenants, agreements and conditions contained
herein, each of the parties hereto agrees as follows:
ARTICLE I
PURCHASE AND SALE OF THE SECURITIES
Section 1.1 Purchase and Sale. At the Closing on the Closing Date
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(each as defined in Section 1.3) and in accordance with the provisions of this
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Agreement, Purchaser shall purchase from the Company, and the Company shall sell
to Purchaser, 10,725 shares of Series A Preferred Stock, at a purchase price of
$100 per share (the "Per Share Price"), against receipt by the Company of the
total aggregate consideration set forth in Section 1.2 below.
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Section 1.2 Payment of Consideration; Delivery of Shares. In
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consideration for the delivery and transfer to Purchaser of all of the Series A
Preferred Stock, Purchaser shall pay and deliver to the Company a total
aggregate amount of One Million Seventy-Two Thousand Five Hundred Dollars
($1,072,500) (the "Purchase Price"), as follows:
(a) Purchaser shall pay an amount equal to One Million
Seventy-Two Thousand Five Hundred Dollars ($1,072,500) on the Closing Date (as
defined below), in cash by wire transfer of immediately available funds to a
bank account as shall have been designated by the Company prior to the Closing
(as defined below) and the Company shall deliver ten thousand seven hundred
twenty five (10,725) shares of Series A Preferred Stock in amounts and
denominations in accordance with Purchaser's instructions.
(b) Notwithstanding anything to the contrary herein, under no
circumstances shall any Series A Preferred Stock be issued by the Company in
contravention of the Listing Standards, Policies and Requirements of The
American Stock Exchange ("Amex"), including without limitation Sections 711 and
713 thereof.
Section 1.3 Additional Purchase. For a period of seven (7) months from
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the date hereof (the "Escrow Period"), Purchaser shall maintain on deposit with
National Securities Corporation (the
"Broker-Dealer Subsidiary") in accordance with the terms of an Escrow Agreement
(the "Escrow Agreement"), substantially in the form of Exhibit C hereto, Five
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Hundred Thousand Dollars ($500,000) (the "Escrow Amount") to be drawn down by
the Company, on an as needed basis, in the event the Company requires additional
capital (a) to satisfy its Clearing Agreement dated as of August 23, 2001
between First Clearing Corporation ("First Clearing") and the Broker-Dealer
Subsidiary or (b) for working capital if the Company does not attain
profitability within the Escrow Period. Upon each draw down of the Escrow
Amount, the Company shall issue such number of shares of Series A Preferred
Stock as payment therefor at the Per Share Price in amounts and denominations in
accordance with Purchaser's instructions. Upon expiration of the Escrow Period,
the Broker-Dealer Subsidiary, as escrow agent, shall pay Purchaser the balance
of the Escrow Amount, if any, in accordance with Purchaser's instructions as
more fully set forth in the Escrow Agreement.
Section 1.4 Closing. The closing (the "Closing") shall take place at
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the offices of Xxxxxxxxx Traurig, LLP, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
at 10:00 A.M. New York City time on the first business day immediately following
the date on which the last of the conditions set forth in Article VII is
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fulfilled or waived (other than conditions that by their nature are required to
be performed on the Closing Date, but subject to satisfaction of such
conditions) (the "Closing Date") or at such other time and place and such other
date as Purchaser and the Company mutually agree. All events occurring at the
Closing will, unless otherwise specified, be deemed to have simultaneously
occurred.
ARTICLE II
CLOSING DELIVERIES
Section 2.1 Company Deliveries. At the Closing, the Company shall
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deliver to Purchaser:
(a) one or more stock certificates or instruments registered
in the name of Purchaser and representing the Series A Preferred Stock to be
delivered at the Closing, duly endorsed in blank or accompanied by stock
transfer powers and with all requisite stock transfer tax stamps attached, which
certificates bear the legend set forth in Section 4.9;
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(b) the certificate referred to in Section 7.3(b) of this
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Agreement;
(c) written resignations from SAR, X. X. Xxxxx and Xxxxx X.
Xxxxxxx, Xx. as officers and/or directors of the Company;
(d) copies of the Consulting Agreements (as defined in
Section 7.3) executed by the respective Consultants (as defined in Section 7.3),
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the Company and the Broker-Dealer Subsidiary);
(e) a certified copy of each of the Company's and the
Broker-Dealer Subsidiary articles of incorporation, as amended;
(f) a certified copy of the Company's Certificate of
Designations with respect to the Series A Preferred Stock (the "Series A
Certificate of Designations"), in substantially the form attached hereto as
Exhibit A;
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(g) good standing certificates dated within five (5) days of
the Closing Date of each of the Company and the Broker-Dealer Subsidiary; and
(h) such other documents as Purchaser may reasonably
request.
Section 2.2 Purchaser Deliveries. At the Closing, Purchaser shall
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deliver:
(a) One Million Seventy-Two Thousand Five Hundred Dollars
($1,072,500) as provided in Section 1.2(a);
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(b) the certificate referred to in Section 7.2(b) of this
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Agreement;
(c) good standing certificates dated within five (5) days of the
Closing Date of each of Triage and the Xxxxxxxxxx Entity (as defined in Section
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7.2(d));
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(d) a certified copy of each of Triage's and the Xxxxxxxxxx
Entity's (as defined in Section 7.2(d)) organizational documents; and
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(e) such other documents as the Company may reasonably request.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the corresponding sections or subsections of the Company
Disclosure Schedule, dated as of the date hereof, delivered by the Company to
Purchaser (the "Company Disclosure Schedule") or in the Company SEC Reports (as
defined in Section 3.5), the Company represents and warrants to Purchaser as
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follows:
Section 3.1 Organization and Qualification. The Company and each of
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its subsidiaries (as defined below) is a corporation or other legal entity duly
organized, validly existing and in good standing under the laws of its
jurisdiction of existence, has all requisite corporate power and authority, and
has been duly authorized by all necessary approvals and orders, to own, lease
and operate its assets and properties to the extent owned, leased and operated
and to carry on its business as it is now being conducted and is duly qualified
and in good standing to do business in each jurisdiction in which the nature of
its business or the ownership or leasing of its assets and properties makes such
qualification necessary, other than in such jurisdictions where the failure to
be so qualified and in good standing would not, when taken together with all
other such failures, reasonably be expected to have a material adverse effect on
the business, properties, condition (financial or otherwise), prospects (other
than effects that are the result of general economic changes or
industry-specific risks) or results of operations of the Company and its
subsidiaries taken as a whole (any such material adverse effect being hereafter
referred to as a "Company Material Adverse Effect"). As used in this Agreement,
the term "subsidiary" of a person shall mean any corporation or other entity
(including partnerships and other business associations) of which a majority of
the outstanding capital stock or other voting securities having voting power
under ordinary circumstances to elect directors or similar members of the
governing body of such corporation or entity shall at the time be held, directly
or indirectly, by such person. True, accurate and complete copies of the
articles of incorporation, as amended, and by-laws of the Company and each
subsidiary of the Company as in effect on the date hereof, have been made
available to Purchaser.
Section 3.2 Subsidiaries. Except as set forth on Section 3.2 of the
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Company Disclosure Schedule, which includes a true and correct statement and
description of the nature and extent of the ownership or other interest in each,
the Company has no subsidiaries and does not currently own or control, directly
or indirectly, any equity interest, nor has any commitment to purchase or
otherwise acquire any equity interest, in any other corporation, partnership,
limited liability company, association, or other business entity. Except as set
forth on Section 3.2 of the Company Disclosure Schedule, the Company is not a
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participant in any joint venture, partnership, or similar arrangement.
Section 3.3 Capitalization. The authorized capital stock of the
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Company consists of 6,000,000 shares of common stock, par value $.02, of the
Company (the "Common Stock"), and 100,000 shares of preferred stock, par value
$.01 per share (the "Preferred Stock"). As of the date hereof, there were (i)
2,236,449 issued and outstanding shares of Common Stock and (ii) no issued and
outstanding shares of Preferred Stock. In addition, as of the date hereof, (i)
1,272,508 shares of Common Stock were reserved for issuance pursuant to grants
made in accordance with the Company's stock option plans, (ii) 985,000 shares of
Common Stock were authorized for issuance pursuant to the 2001 Stock Option
Plan, and (iii) 467,925 shares of Common Stock were reserved for issuance
pursuant to securities exercisable for, or convertible into or exchangeable for,
shares of Common Stock. This Agreement, and the
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transactions contemplated hereby, will not cause a mandatory redemption,
liquidation, acceleration or vesting of any other right under any outstanding
subscriptions, options, calls, contracts, voting trusts, proxies, rights or
warrants, including any right of conversion or exchange under any outstanding
security, instrument or other agreement. All of the issued and outstanding
shares of capital stock of the Company are duly authorized, validly issued,
fully paid and non-assessable. Except for the Series A Preferred Stock or as set
forth on Section 3.3 of the Company Disclosure Schedule, there are no
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outstanding subscriptions, options, calls, contracts, voting trusts, proxies,
rights or warrants, including any right of conversion or exchange under any
outstanding security, instrument or other agreement, obligating the Company or
any of its subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock of the Company, or
obligating the Company to grant, extend or enter into any such agreement or
commitment.
Section 3.4 Authority; Non-Contravention; Statutory Approvals;
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Compliance.
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(a) The execution, delivery and performance of this Agreement
and the transactions contemplated hereby, are within the Company's power and
authority and have been duly authorized by the board of directors of the
Company, and no other corporate act or proceeding on the part of the Company is
necessary to approve the execution and delivery of this Agreement, the
performance of the Company's obligations hereunder or the consummation of the
transactions contemplated hereby. The execution, delivery and performance by the
Company of this Agreement, do not and will not (i) contravene the articles of
incorporation or by-laws of the Company or any of its subsidiaries, (ii)
conflict with, result in a breach of or entitle any party (with due notice or
lapse of time or both) to terminate, accelerate or call a default with respect
to, any agreement or instrument to which the Company or any of its subsidiaries
is a party or by which the Company or any of its subsidiaries is bound, (iii)
result in any material liability to the Company (including, without limitation,
any "change of control" payments), (iv) result in any violation by the Company
or any of its subsidiaries of any law, rule or regulation applicable to it or
its business as it is now conducted or (v) result in the creation of any lien.
This Agreement constitutes the legal, valid and binding obligation of the
Company enforceable against it in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to the enforcement of creditors'
rights generally and general equitable principles.
(b) The Series A Preferred Stock that are being purchased by
the Purchaser hereunder, when issued, sold and delivered in accordance with the
terms of this Agreement for the consideration expressed herein, (i) will be duly
and validly issued, fully paid and non-assessable, (ii) will be free from all
taxes, liens and charges with respect to such issuance and (iii) will be free of
restrictions on transfer other than restrictions on transfer under this
Agreement and under applicable state and federal securities laws.
(c) The shares of Common Stock issuable upon conversion of the
Series A Preferred Stock have been reserved for issuance and, when so issued,
(i) will be duly and validly issued, fully paid and non-assessable, (ii) will be
free from all taxes, liens and charges with respect to such issuance and (iii)
will be free of restrictions on transfer other than restrictions on transfer
under this Agreement and under applicable state and federal securities laws.
(d) No consent, license, permit, approval, order or
authorization of, or filing with (other than informational filings) any
governmental or judicial authority is required to be obtained or made in
connection with the execution, delivery or performance by the Company of this
Agreement. No consent of any party to any agreement, contract, lease, mortgage,
indenture or arrangement to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries is bound is required
for the execution, delivery or performance by the Company of this Agreement and
such instruments and documents executed in connection therewith which has not
been obtained.
(e) No declaration, filing or registration with, or notice to
or authorization, consent or approval of, any federal, state, local or foreign
government, any instrumentality, subdivision, court, administrative agency or
commission or authority thereof, or any quasi-governmental or private body
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exercising any regulatory, taxing, importing or other governmental or
quasi-governmental authority or regulatory body (including the National
Association of Securities Dealers, Inc. ("NASD"), Amex and any other similar
federal, state or foreign self- regulatory body or organization having
jurisdiction over the Company and any of its subsidiaries or affiliates) or any
other authority (each, a "Governmental Authority") is necessary for the
execution and delivery of this Agreement by the Company or the consummation by
the Company of the transactions contemplated hereby, except for those required
under or in relation to (A) state securities or "blue sky" laws (the "Blue Sky
Laws"), (B) the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), (C) the Delaware General Corporation Law with respect to filing the
Certificate of Designations, (D) the rules and regulations of the Amex, and (E)
such consents, approvals, order, authorizations, registrations, declarations and
filings the failure to obtain, make or give which would reasonably be expected
to have, in the aggregate, a Company Material Adverse Effect (collectively, the
"Company Required Statutory Approvals"), it being understood that references in
this Agreement to "obtaining" such Company Required Statutory Approvals shall
mean making such declarations, filings or registrations; giving such notice;
obtaining such consents or approvals; and having such waiting periods expire as
are necessary to avoid a violation of law.
(f) Neither the Company nor any of its subsidiaries is in
violation of or, to the knowledge of the Company, under investigation with
respect thereto, or has been given notice of any purported violation of, any
applicable law, ordinance, regulation, decree or order of any court or
governmental entity to which it or its business or any of its properties or
assets is subject, except for violations which would not reasonably be expected
to have, in the aggregate, a Company Material Adverse Effect.
(g) The Company and its subsidiaries have all permits,
licenses, franchises and other governmental authorizations, consents and
approvals necessary to conduct their respective businesses as currently
conducted in all respects (collectively, "Permits"), except those which the
failure to obtain would, in the aggregate, not reasonably be expected to have a
Company Material Adverse Effect. The Company and each of its subsidiaries are
not in breach or violation of or in default in the performance or observance of
any term or provision of, and no event has occurred which, with lapse of time or
action by a third party, could result in a default under, (i) its articles of
incorporation or by-laws or (ii) any contract, commitment, agreement, indenture,
mortgage, loan agreement, note, lease, bond, license, approval or other
instrument to which it is a party or by which it is bound or to which any of its
property is subject, except for breaches, violations or defaults that, in the
aggregate, are not reasonably expected to have a Company Material Adverse
Effect.
(h) The Broker-Dealer Subsidiary is a Washington corporation
and a subsidiary of the Company and is a registered broker-dealer with the
United States Securities and Exchange Commission ("SEC") pursuant to Section 15
of the Exchange Act. A full and complete copy of the Broker Dealer Subsidiary's
Form BD, as amended (the "Form BD"), and Membership Agreement, are attached
hereto as Section 3.4(h) to the Company Disclosure Schedule. Neither Form BD nor
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any amendment thereto contains any untrue statement or material fact or omits to
state a material fact required to be stated or necessary in order to make the
statements contained therein not misleading.
Section 3.5 Reports and Financial Statements. The Company previously
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has delivered or made available to Purchaser a copy of each of the continuous
disclosure documents filed by the Company with the SEC since August 1, 1999 (the
"Company SEC Reports"). Except insofar as the transactions contemplated hereby
are not reflected therein, (a) the Company SEC Reports comply in all material
respects with the applicable US securities laws and rules and regulations
thereunder, and (b) the financial statements contained therein (i) were prepared
in accordance with GAAP, (ii) are true and complete and fairly present the
Company's consolidated financial condition and the consolidated results of its
operations as of their respective dates and for the periods then ended, and
(iii) contain and reflect all necessary adjustments and accruals for a fair
presentation of the Company's consolidated financial condition as of their
respective dates. No representation or warranty made by the Company herein, or
in any document delivered pursuant hereto, contains any misstatement of any
material fact or omits to state anything necessary to make any material
statement herein or therein not misleading. The Company SEC
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Reports, as of the respective dates thereof, do not contain any misstatement of
a material fact or omit to state anything necessary to make any material
statement therein not misleading.
Each of the audited consolidated financial statements and unaudited interim
financial statements (including, in each case, the notes, if any, thereto)
included in the Company SEC Reports (collectively, the "Company Financial
Statements") complied as to form in all material respects with the published
rules and regulations of the SEC with respect thereto, were prepared in
accordance with United States generally accepted accounting principles applied
on a consistent basis during the periods involved (except as may be indicated
therein or in the notes thereto and except with respect to unaudited statements
as permitted by Form 10-Q of the SEC) and fairly present (subject, in the case
of the unaudited interim financial statements, to normal, recurring year-end
audit adjustments (which are not expected to be, individually or in the
aggregate, materially adverse to the Company and its subsidiaries, taken as a
whole)) the consolidated financial position of the Company as of the dates
thereof and the consolidated results of operations and cash flows for the
periods then ended.
There are no liabilities as of the date of this Agreement of the
Company or any of its subsidiaries of any kind whatsoever that are required to
be disclosed on the Company Financial Statements, whether accrued, contingent,
absolute, determined, determinable or otherwise, and there is no existing
condition, situation or set of circumstances known to the Company or any of its
subsidiaries which could reasonably be expected to result in such a liability,
other than:
(i) liabilities reflected or reserved against in the Company
Financial Statements; and
(ii) liabilities arising, in the ordinary course of business
consistent with past practice, after the date of the most recent statement of
financial condition included in the Company Financial Statements (the "Balance
Sheet Date"), that could not reasonably be expected to have a Company Material
Adverse Effect.
Section 3.6 Absence of Certain Changes or Events. Except as disclosed
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in Section 3.6 of the Company Disclosure Schedule or for changes in the ordinary
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course of business, since June 29, 2001 there has not been:
(i) any material adverse change in the assets,
liabilities, financial condition or operating results of the Company or the
Broker-Dealer Subsidiary;
(ii) any damage, destruction or loss, whether or not
covered by insurance, materially and adversely affecting the business,
properties, or financial condition of the Company or the Broker-Dealer
Subsidiary (as such business is presently conducted and as it is proposed to be
conducted);
(iii) any waiver or compromise by the Company or the
Broker-Dealer Subsidiary of a valuable right or of a material debt owed to it;
(iv) any satisfaction or discharge of any lien, claim, or
encumbrance or payment of any obligation by the Company or the Broker-Dealer
Subsidiary, except in the ordinary course of businesses and that are not
material to the business, properties, or financial condition of the Company or
the Broker-Dealer Subsidiary (as such respective businesses is presently
conducted and as they are proposed to be conducted);
(v) any material change to a material contract or
arrangement by which the Company or the Broker-Dealer Subsidiary or any of their
respective assets are bound or subject;
(vi) any material change in any compensation arrangement
or agreement with any employee, officer, director of the Company or the
Broker-Dealer Subsidiary or holder of Common Stock;
(vii) any sale, assignment or transfer of any material
patents, trademarks,
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copyrights, trade secrets or other intangible assets;
(viii) any resignation or termination of employment of any
officer or key employee of the Company or the Broker-Dealer Subsidiary; and
neither the Company nor the Broker-Dealer Subsidiary knows of any impending
resignation or termination of employment of any such officer or key employee;
(ix) receipt of notice that there has been a loss of any
major customer of the Company or the Broker-Dealer Subsidiary;
(x) any mortgage, pledge, transfer of a security interest
in, or lien, created by the Company or the Broker-Dealer Subsidiary, with
respect to any of its material properties or assets, except liens for taxes not
yet due or payable;
(xi) any material loans or guarantees made by the Company or
the Broker-Dealer Subsidiary to or for the benefit of its employees, holders of
Common Stock, officers, or directors, or any members of their immediate
families, other than travel advances and other advances made in the ordinary
course of its business;
(xii) any declaration, setting aside, or payment of any
dividend or other distribution of the Company's or the Broker-Dealer
Subsidiary's respective assets in respect of any Preferred Stock or Common Stock
of the Company or the Broker-Dealer Subsidiary, or any direct or indirect
redemption, purchase, or other acquisition of any preferred stock or Common
Stock by the Company or the Broker-Dealer Subsidiary;
(xiii) to the best of the Company's knowledge, any other event
or condition of any character that is reasonably likely to have a Company
Material Adverse Effect;
(xiv) any material change in the customary methods used in
operating the Company's or the Broker-Dealer Subsidiary's respective businesses;
and
(xv) any arrangement or commitment by the Company or the
Broker-Dealer Subsidiary to do any of the things described in this Section 3.6.
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Section 3.7 Litigation. Except as set forth in Section 3.7 of the Company
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Disclosure Schedule, (i) there are no claims, suits, actions or proceedings
pending or, to the knowledge of the Company, threatened, nor are there any
investigations or reviews pending or threatened against, relating to or
affecting the Company or any of its subsidiaries or, to the knowledge of the
Company, any of its joint ventures, (ii) there have not been any developments
since June 29, 2001 with respect to any such disclosed claims, suits, actions,
proceedings, investigations or reviews, (iii) there are no judgments, decrees,
injunctions, rules or orders of any court, governmental department, commission,
agency, instrumentality or authority or any arbitrator applicable to the Company
or any of its subsidiaries, (iv) except as set forth on the Form BD or in the
Membership Agreement, each with respect to the Broker-Dealer Subsidiary, there
are no special restrictions or limitations imposed by NASD against the
Broker-Dealer Subsidiary relating to the conduct by the Broker-Dealer
Subsidiary, and (v) the Broker-Dealer Subsidiary's state broker-dealer
registrations have not been terminated and, to the knowledge of the Company,
there has not been, nor is there currently pending or threatened, any inquiry,
investigation, administrative proceeding, or civil action undertaking or
initiated by such states or jurisdictions concerning the Broker-Dealer
Subsidiary or its officers, directors, registered principals, or registered
representatives, except for any of the foregoing under clauses (i), (ii), (iii),
(iv) and (v) that individually or in the aggregate would not reasonably be
expected to have a Company Material Adverse Effect.
Section 3.8 Board Approval. The Company's board of directors (the "Board of
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Directors"), by resolutions duly adopted by unanimous vote of those voting at a
meeting duly called and held and not subsequently rescinded or modified in any
way (the "Company Board Approval"), has duly (i) determined that this Agreement
and the transactions contemplated hereby are fair to and in the best
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interests of the Company and its stockholders and declared the transactions
contemplated hereby to be advisable, and (ii) approved this Agreement and the
transactions contemplated hereby.
Section 3.9 No Brokers. The Company has taken no action which would
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give rise to any claim by any person for brokerage commissions, finder's fees or
similar payments relating to this Agreement or the transactions contemplated
hereby.
Section 3.10 Broker-Dealers.
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(a) The Broker-Dealer Subsidiary is a member in good
standing with the NASD, and, to the knowledge of the Company, there has not been
for the most recent three years, nor is there currently pending or threatened,
any inquiry investigation or disciplinary proceeding undertaken by the NASD
concerning the Broker-Dealer Subsidiary or any of its officers, directors,
registered principals, or registered representatives.
(b) The Broker-Dealer Subsidiary is registered with the
Central Registration Depository (the "CRD") under CRD Number 7569.
(c) The Broker-Dealer Subsidiary is duly registered with the
Security Investors Protection Corporation ("SIPC") and has paid or has made
adequate provision for the payment of all SIPC assessments as of and through
December 31, 2001.
(d) The Broker-Dealer Subsidiary has been and is in
compliance with the applicable net capital provisions of the Exchange Act and
the applicable rules of all self-regulatory organizations including, without
limitation, all applicable regulatory net capital requirements (including any
applicable "early warning" and "expansion-contraction" capital requirements).
(e) The Broker-Dealer Subsidiary has adopted record-keeping
systems that comply with the requirements of Section 17 of the Exchange Act and
the rules and regulations promulgated thereunder and the rules of any securities
exchange having jurisdiction with regard to the Broker-Dealer Subsidiary, and
maintains its records in accordance therewith.
(f) The Broker-Dealer Subsidiary is not, nor is any
Affiliate (as defined below) of it, subject to a "statutory disqualification" as
defined in Section 3(a)(39) of the Exchange Act, nor is it subject to a
disqualification that would be a basis for censure, limitations on the
activities, functions or operations of, or suspension or revocation of, its
registration as a broker-dealer under Section 15 of the Exchange Act and, to the
Company's knowledge, there is no current investigation, whether formal or
informal, or whether preliminary or otherwise, that is reasonably likely to
result in, any such censure, limitation, suspension or revocation. No
"principals" of the Broker-Dealer Subsidiary (as defined in Section 8a(2) of the
Commodity Exchange Act of 1936, as amended (the "Commodity Exchange Act")) are
subject to any of the provisions of Section 8 of the Commodity Exchange Act that
would permit the Commodity Futures Trading Commission (the "CFTC"), subject to
the terms of such section, to refuse to register or to suspend or revoke the
registration of any of them. For purposes of this Agreement, "Affiliate" means
any person that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, the subject person.
As used in this definition, "control" (including, with its correlative meanings,
"controlled by" and "under common control with") shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of a subject person (whether through ownership of
securities or partnership or other ownership interests, by contract or
otherwise). With respect to any person who is an individual, "Affiliates" shall
also include, without limitation, any member of such individual's family group.
(g) The Broker-Dealer Subsidiary currently has in effect a
blanket broker-dealer fidelity bond as summarized on Section 3.10(g) of the
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Company Disclosure Schedule.
(h) All swap, forward future, option, or any similar
agreements or arrangements executed or arranged by the Broker-Dealer Subsidiary
were, to the Company's knowledge, entered into (i)
8
in accordance with all applicable laws, rules, regulations and regulatory
policies and (ii) with counterparties believed at the time to be financially
responsible; and each of them constitutes the valid and legally binding
obligation of the Broker-Dealer Subsidiary and such counterparties, enforceable
in accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles (whether such enforceability is considered in a proceeding
in equity or at law). Neither the Company nor any of its subsidiaries nor, to
the Company's knowledge, any other party thereto, is in breach of any of its
obligations under any such agreement or arrangement.
Section 3.11 ERISA.
-----
(a) Section 3.11(a) of the Company Disclosure Schedule sets
---------------
forth a complete and correct list of (i) all "employee benefit plans," as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), and any other pension plans or employee benefit
arrangements, programs or payroll practices (including, without limitation,
severance pay, vacation pay, company awards, salary continuation for disability,
sick leave, retirement, deferred compensation, bonus or other incentive
compensation, stock purchase arrangements or policies, hospitalization, medical
insurance, life insurance and scholarship programs) maintained by the Company or
any of its subsidiaries or to which the Company or any of its subsidiaries
contributes or is obligated to contribute thereunder with respect to employees
of the Company ("Employee Benefit Plans") and (ii) all "employee pension plans,"
as defined in Section 3(2) of ERISA, maintained by the Company or any of its
subsidiaries or any trade or business (whether or not incorporated) which are
under control, or which are treated as a single employer, with Company under
Section 414(b), (c), (m) or (o) of ERISA ("ERISA Affiliate") or to which the
Company, any of its subsidiaries or any ERISA Affiliate contributed or is
obligated to contribute thereunder ("Pension Plans"). Neither the Company, nor
any ERISA Affiliate currently, nor in the prior six years, has maintained or
been obligated to contribute to any Employee Benefit Plans or Pension Plans that
are (i) subject to Section 4063 and 4064 of ERISA or Section 412 of the Code,
(ii) multiemployer plans (as defined in Section 4001(a)(3) of ERISA)
("Multiemployer Plans") or (iii) "benefit plans," within the meaning of Section
5000(b)(1) of the Internal Revenue Code of 1986, as amended ("Code") providing
continuing benefits after the termination of employment (other than as required
by Section 4980B of the Code or Part 6 of Title I of ERISA or similar state
legislation and at the former employee's or his beneficiary's sole expense).
(b) Each of the Employee Benefit Plans and Pension Plans
intended to qualify under Section 401 of the Code ("Qualified Plans") so
qualifies and the trusts maintained thereto are exempt from federal income
taxation under Section 501 of the Code, and, except as disclosed on Section
-------
3.11(c) of the Company Disclosure Schedule, nothing has occurred with respect to
-------
the operation of any such plan which could cause the loss of such qualification
or exemption or the imposition of any liability, penalty or tax under ERISA or
the Code.
(c) There has been no material violation of ERISA with
respect to the filing of applicable returns, reports, documents and notices
regarding any of the Employee Benefit Plans or Pension Plans with the United
States Secretary of Labor or the United States Secretary of the Treasury or the
furnishing of such notices or documents to the participants or beneficiaries of
the Employee Benefit Plans or Pension Plans.
(d) True, correct and complete copies of the following
documents, with respect to each of the Employee Benefit Plans and Pension Plans
(as applicable), have been delivered or made available to Purchaser: (A) any
plans and related trust documents, and all amendments thereto, (B) the most
recent Forms 5500 for the past three years and schedules thereto, (C) the most
recent financial statements and actuarial valuations, if applicable, for the
past three years, (D) the most recent Internal Revenue Service determination
letter, (E) the most recent summary plan descriptions (including letters or
other documents updating such descriptions) and (F) written descriptions of all
non-written agreements relating to the Employee Benefit Plans and Pension Plans.
9
(e) There are no pending legal proceedings which have been
asserted or instituted against any of the Employee Benefit Plans or Pension
Plans, the assets of any such plans or the Company, or the plan administrator or
any fiduciary of the Employee Benefit Plans or Pension Plans with respect to the
operation of such plans (other than routine, uncontested benefit claims), and
there are no facts or circumstances which, to the knowledge of the Company,
could form the basis for any such legal proceeding.
(f) Each of the Employee Benefit Plans and Pension Plans has
been maintained, in all material respects, in accordance with its terms and all
provisions of applicable law. All amendments and actions required to bring each
of the Employee Benefit Plans and Pension Plans into conformity in all material
respects with all of the applicable provisions of ERISA and other applicable
laws have been made or taken, except to the extent that such amendments or
actions are not required by law to be made or taken until a date after the
Closing Date or are disclosed on Section 3.11(j) of the Company Disclosure
---------------
Schedule.
(g) Each of the Company, its subsidiaries and any ERISA
Affiliate which maintains a "benefits plan" within the meaning of Section
5000(b)(1) of ERISA, has complied with the notice and continuation requirements
of Section 4980B of the Code or Part 6 of Title I of ERISA and the applicable
regulations thereunder.
(h) Neither the Company nor any of its subsidiaries nor any
"party in interest" or "disqualified person" with respect to the Employee
Benefit Plans or Pension Plans has engaged in a "prohibited transaction" within
the meaning of Section 4975 of the Code or Section 406 of ERISA.
Section 3.12 Intangible Rights. Set forth on Section 3.12 of the
----------------- ------------
Company Disclosure Schedule is a list and description of all material foreign
and domestic patents, patent rights, trademarks, service marks, trade names,
brands and copyrights (whether or not registered and, if applicable, including
pending applications for registration) owned, used, licensed or controlled by
the Company or the Broker-Dealer Subsidiary, and all goodwill associated
therewith. The Company or the Broker-Dealer Subsidiary owns or has the right to
use and shall as of the Closing Date own or have the right to use any and all
information, know-how, trade secrets, patents, copyrights, trademarks,
tradenames, software, formulae, methods, processes and other intangible
properties that are necessary or customarily used by the Company or the
Broker-Dealer Subsidiary for the ownership, management or operation of its
properties ("Intangible Rights") including, but not limited to, the Intangible
Rights listed on Section 3.12 of the Company Disclosure Schedule. Furthermore:
------------
(i) either the Company or the Broker-Dealer Subsidiary is the sole and exclusive
owner of all right, title and interest in and to all of the Intangible Rights,
and has the exclusive right to use and license the same, free and clear of any
claim or conflict with the Intangible Rights of others; (ii) no royalties,
honorariums or fees are payable by the Company or the Broker-Dealer Subsidiary
to any person by reason of the ownership or use of any of the Intangible Rights;
(iii) there have been no claims made against the Company or the Broker-Dealer
Subsidiary asserting the invalidity, abuse, misuse, or unenforceability of any
of the Intangible Rights and, to the knowledge of the Company, no grounds for
any such claims exist; (iv) neither the Company nor the Broker-Dealer Subsidiary
have made any claim of any violation or infringement by others of any of its
Intangible Rights or interests therein and, to the knowledge of the Company, no
grounds for any such claims exist; (v) neither the Company nor the Broker-Dealer
Subsidiary have received any notice that it is in conflict with or infringing
upon the asserted intellectual property rights of others in connection with the
Intangible Rights, and neither the use of the Intangible Rights nor the
operation of the Company's or the Broker-Dealer Subsidiary's businesses is
infringing or has infringed upon any intellectual property rights of others;
(vi) the Intangible Rights are sufficient and include all intellectual property
rights necessary for the Company or the Broker-Dealer Subsidiary to lawfully
conduct its business as presently being conducted; (vii) no interest in any of
the Company's or the Broker-Dealer Subsidiary's Intangible Rights has been
assigned, transferred, licensed or sublicensed by the Company to any person
other than Purchaser pursuant to this Agreement; (viii) to the extent that any
item constituting part of the Intangible Rights has been registered with, filed
in or issued by any Governmental Authority, such registrations, filings or
issuances are listed on Section 3.12 of the Company Disclosure Schedule and were
------------
duly made and remain in full force and effect; (ix) to the knowledge of the
Company, there has not been any act or failure to act by the Company
10
or the Broker-Dealer Subsidiary or any of their respective directors, officers,
employees, attorneys or agents during the prosecution or registration of, or any
other proceeding relating to, any of the Intangible Rights or of any other fact
which could render invalid or unenforceable, or negate the right to issuance of,
any of the Intangible Rights; (x) to the extent any of the Intangible Rights
constitutes proprietary or confidential information, the Company has adequately
safeguarded such information from disclosure; and (xi) all of the Company's and
the Broker-Dealer Subsidiary's current Intangible Rights will remain in full
force and effect following the Closing without alteration or impairment.
Section 3.13 Foreign Corrupt Practices. Neither the Company nor any of
-------------------------
its subsidiaries, nor, to the best knowledge of the Company, no director,
officer, agent, employee of the Company or other person acting on behalf of the
Company or any subsidiary has, in the course of his actions for, or on behalf
of, the Company, used any corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expenses relating to political activity; made
any direct or indirect unlawful payment to any foreign or domestic government
official or employee from corporate funds; violated or is in violation of any
provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or made
any bribe, rebate, payoff, influence payment, kickback or other unlawful payment
to any foreign or domestic government official or employee.
Section 3.14 Clearing Agreements. Neither the Company nor any of its
-------------------
subsidiaries has any agreements with their respective customers relating to
the clearing of futures or securities transactions, the custody of assets or
the extension of credit.
Section 3.15 Taxes. "Taxes," as used in this Agreement, means any
-----
federal, state, county, local or foreign taxes, charges, fees, levies or other
assessments, including, without limitation, all net income, gross income, sales
and use, ad valorem, transfer, gains, profits, excise, franchise, real and
personal property, gross receipts, capital stock, production, business and
occupation, disability, employment, payroll, license, estimated, stamp, custom
duties, severance or withholding taxes or charges imposed by any governmental
entity, and includes any interest and penalties (civil or criminal) on or
additions to any such taxes. "Tax Return," as used in this Agreement, means a
report, return, declaration, statement, information statement and other document
required to be supplied to a governmental entity with respect to Taxes. Except
as set forth in Section 3.15 of the Company Disclosure Schedule, the Company
------------
represents and warrants to Purchaser as follows:
(a) Filing of Timely Tax Returns. The Company and each of its
----------------------------
subsidiaries have duly filed (or there has been filed on its or their behalf)
within the time prescribed by law all material Tax Returns required to be filed
by each of them under applicable law. All such Tax Returns were and are in all
material respects complete and correct.
(b) Payment of Taxes. The Company and each of its subsidiaries
----------------
have, within the time and in the manner prescribed by law, paid all material
Taxes that are currently due and payable, except for those contested in good
faith and for which adequate reserves have been taken.
(c) Tax Reserves. The Company and each of its subsidiaries
------------
have established on their respective books and records adequate reserves for all
Taxes and for any liability for deferred income taxes in accordance with United
States generally accepted accounting principles.
(d) Extensions of Time for Filing Tax Returns. Neither the
-----------------------------------------
Company nor any of its subsidiaries has requested any extension of time within
which to file any material Tax Return, which Tax Return has not since been
filed.
(e) Waivers of Statute of Limitations. Neither the Company nor
---------------------------------
any of its subsidiaries has in effect any extension, outstanding waivers or
comparable consents regarding the application of the statute of limitations with
respect to any material Taxes or material Tax Returns.
(f) Expiration of Statute of Limitations. The Tax Returns of
------------------------------------
the Company and each of its subsidiaries for all years through and including
1997 either have been examined and settled with the
11
appropriate Tax authority or closed by virtue of the expiration of the
applicable statute of limitations.
(g) Audit, Administrative and Court Proceedings. No material
-------------------------------------------
audits or other administrative proceedings are presently pending or threatened
with regard to any Taxes or Tax Returns of the Company or any of its
subsidiaries (other than those being contested in good faith and for which
adequate reserves have been established) and no issues have been raised in
writing by any taxing authority to the Company or any of its subsidiaries in
connection with any Tax or Tax Return.
(h) Tax Liens. There are no Tax liens upon any asset of the
---------
Company or any of its subsidiaries except liens for Taxes not yet due.
(i) Tax Rulings. Neither the Company nor any of its
-----------
subsidiaries has received a Tax Ruling (as defined below) or entered into a
Closing Agreement (as defined below) with any taxing authority that would have a
continuing adverse effect after the Closing Date. "Tax Ruling," as used in this
Agreement, shall mean a written ruling of a taxing authority relating to Taxes.
"Closing Agreement," as used in this Agreement, shall mean a written and legally
binding agreement with a taxing authority relating to Taxes.
(j) Availability of Tax Returns. The Company has provided or
---------------------------
made available to Purchaser complete and accurate copies of (A) all Tax Returns,
and any amendments thereto, filed by the Company or any of its subsidiaries
covering all years ending on or after December 31, 1997, (B) all audit reports
received from any taxing authority relating to any Tax Return filed by the
Company or any of its subsidiaries covering all years ending on or after
December 31, 1997 and (C) all powers of attorney currently in force granted by
the Company or any of its subsidiaries concerning any material Tax matter.
(k) Tax Sharing Agreements. Neither the Company nor any of
----------------------
its subsidiaries is a party to any agreementn relating to allocating, sharing
or indemnification of Taxes.
(l) Liability for Others. Neither the Company nor any of its
--------------------
subsidiaries has any liability for any material Taxes of any person other than
the Company and its subsidiaries (i) under Treasury Regulation Section 1.1502-6
(or any similar provision of state, local or foreign law), (ii) as a transferee
or successor, (iii) by contract or (iv) otherwise.
(m) Code Section 355(e). Neither the Company nor any of its
-------------------
subsidiaries has in the past 24-month period constituted a "distributing
corporation" in a distribution of stock qualifying for tax-free treatment under
Section 355 of the Code.
(n) Code Section 280(G). The Company has not made any
-------------------
payments, is not obligated to make any payments, and is not a party to any
agreement that under certain circumstances could obligate it to make any payment
that will not be deductible under Section 280G of the Code.
(o) Code Section 338 Elections. No election under Section 338
--------------------------
of the Code (or any predecessor provisions) has been made by or with respect
to the Company or any of its subsidiaries or any of their respective assets or
properties.
(p) Code Section 481 Adjustments. Neither the Company nor any
----------------------------
of its subsidiaries is required to include in income any adjustment pursuant to
Section 481(a) of the Code by reason of a voluntary change in accounting method
initiated by the Company or any of its subsidiaries, and the Company has no
knowledge that the Internal Revenue Service (the "IRS") has proposed any such
adjustment or change in accounting method.
(q) Filing Jurisdictions. No jurisdiction in which the Company
--------------------
or any of its subsidiaries does not file a Tax Return has made a claim that the
Company or any of its subsidiaries is responsible to file a Tax Return in such
jurisdiction.
(r) Section 341(f). Neither the Company nor any of its
--------------
subsidiaries has filed a
12
consent to the application of Section 341(f) of the Code.
(s) Section 168(h). No property of the Company or any of its
--------------
subsidiaries is "tax-exempt use property" within the meaning of Section 168(h)
of the Code, or property that the Company or any of its subsidiaries will be
required to treat as being owned by another person pursuant to Section 168(f)(8)
of the Internal Revenue Code of 1954, as amended, in effect immediately prior to
the enactment of the Tax Reform Act of 1986.
Section 3.16 Title. The Company and each of its subsidiaries has (A)
-----
good and marketable title to all of the tangible assets and tangible properties
owned by it, free and clear of all liens, (B) valid title to the lessee interest
in all tangible assets and tangible properties leased by them as lessee, free
and clear of all liens, and (C) full right to hold and use all of its tangible
assets and tangible properties used in or necessary to its businesses and
operations, in each case all free and clear of all liens, and in each case
subject to applicable laws and the terms of any lease under which the Company or
such subsidiary leases such tangible assets or tangible properties as lessee, in
each case except (i) for liens for current Taxes not yet delinquent, (ii) for
liens imposed by law and incurred in the ordinary course of business for
obligations not past due to carriers, warehousemen, laborers, materialmen and
the like, (iii) for liens in respect of pledges or deposits under workers'
compensation laws or similar legislation or (iv) for minor defects in title,
none of which, individually or in the aggregate, would constitute a Company
Material Adverse Effect.
Section 3.17 Insurance. Section 3.17 of the Company Disclosure Schedule
--------- ------------
contains an accurate and complete list of insurance policies which the Company
maintains with respect to its business or their properties or employees. Within
the last two years there has not been any material adverse change in the
Company's relationships with its insurers or in the premiums payable pursuant to
such policies. All premiums due and payable on or before the Closing Date shall
have been timely paid.
Section 3.18 Transactions with Affiliates. Neither the Company nor the
----------------------------
Broker-Dealer Subsidiary is indebted, directly or indirectly, to any of its
employees, officers or directors or to their respective spouses or children, in
any amount whatsoever other than in connection with expenses or advances of
expenses incurred in the ordinary course of business or relocation expenses of
employees, officers and directors not in excess of $5,000, nor is the Company or
the Broker-Dealer Subsidiary contemplating such indebtedness as of the date of
this Agreement. To the Company's knowledge, none of said employees, officers or
directors, or any member of their immediate families, is directly or indirectly
indebted to the Company (other than in connection with purchases of the
Company's stock). To the Company's knowledge, no employee, shareholder, officer
or director, or any member of their immediate families, is, directly or
indirectly, interested in any material contract with the Company or the
Broker-Dealer Subsidiary, nor does any such person own, directly or indirectly,
in whole or in part, any material tangible or intangible property that the
Company uses or contemplates using in the conduct of its business. Neither the
Company nor the Broker-Dealer Subsidiary is a guarantor or indemnitor of any
indebtedness of any other person, firm, corporation or entity.
Section 3.19 Material Omissions. No representation or warranty by the
------------------
Company in this Agreement nor any written statement, certificate or schedule
furnished to or to be furnished by the Company pursuant to this Agreement or in
connection with the transactions contemplated herein, contains or will contain
any untrue statement of material fact or omits or will omit a material fact
necessary to make the statements contained therein not misleading in light of
the circumstances in which they are made.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser jointly and severally represents and warrants to the Company
as follows:
Section 4.1 Organization and Qualification/Capacity.
---------------------------------------
13
(a) Organization and Qualification. Triage is a limited
------------------------------
liability company duly organized, validly existing and in good standing under
the laws of its jurisdiction of existence, has all requisite power and
authority, and has been duly authorized by all necessary approvals and orders,
to own, lease and operate its assets and properties to the extent owned, leased
and operated and to carry on its business as it is now being conducted and is
duly qualified and in good standing to do business in each jurisdiction in which
the nature of its business or the ownership or leasing of its assets and
properties makes such qualification necessary, other than in such jurisdictions
where the failure to be so qualified and in good standing would not, when taken
together with all other such failures, reasonably be expected to have a material
adverse effect on the business, properties, condition (financial or otherwise),
prospects (other than effects that are the result of general economic changes or
industry-specific risks) or results of operations of Triage or, in the case of
Xxxxxxxxxx, Xxxxxxxxxx (any such material adverse effect being hereafter
referred to as a "Purchaser Material Adverse Effect").
(b) Capacity. Xxxxxxxxxx has the capacity to enter into this
--------
Agreement and has the full right, power and authority to execute and deliver
this Agreement and to consummate the Transactions.
Section 4.2 Authority; Non-contravention and Statutory Approvals.
----------------------------------------------------
(a) The execution, delivery and performance of this Agreement
and the transactions contemplated hereby, are within Purchaser's power and
authority and have been duly authorized by Purchaser. The execution, delivery
and performance by Purchaser of this Agreement, do not and will not (i)
contravene the articles of formation of Purchaser, (ii) conflict with, result in
a breach of or entitle any party (with due notice or lapse of time or both) to
terminate, accelerate or call a default with respect to, any agreement or
instrument to which Purchaser is a party or by which Purchaser is bound or (iii)
result in any violation by Purchaser of any law, rule or regulation applicable
to it or its business as it is now conducted or result in the creation of any
lien. This Agreement constitutes the legal, valid and binding obligation of
Purchaser enforceable against it in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to the enforcement of creditors'
rights generally and general equitable principles.
(b) No consent, license, permit, approval, order or
authorization of, or filing with (other than informational filings) any
governmental or judicial authority is required to be obtained or made in
connection with the execution, delivery or performance by Purchaser of this
Agreement. No consent of any party to any agreement, contract, lease, mortgage,
indenture or arrangement to which Purchaser is a party or by which Purchaser is
bound is required for the execution, delivery or performance by Purchaser of
this Agreement and such instruments and documents executed in connection
therewith which has not been obtained.
(c) Other than as may be required by the New York Stock
Exchange, Chicago Stock Exchange, NASD, SEC or Amex, no declaration, filing or
registration with, or notice to or authorization, consent or approval of, any
Governmental Authority is necessary for the execution and delivery of this
Agreement by Purchaser or the consummation by Purchaser of the transactions
contemplated hereby.
(d) Purchaser is not in violation of any applicable law,
ordinance, regulation, decree or order of any court or governmental entity to
which it or its business or any of its properties or assets is subject, except
for violations which either singly or in the aggregate would not, when taken
together with all other such failures, reasonably be expected to have a
Purchaser Material Adverse Effect.
Section 4.3 Investment Purpose. As of the date hereof, Purchaser is
------------------
purchasing the Series A Preferred Stock for its own account and not with a
present view towards the public sale or distribution thereof, except pursuant to
sales registered or exempted from registration under the Securities Act or
permitted assignments hereunder.
14
Section 4.4 Accredited Investor Status. Purchaser is an "accredited
--------------------------
investor" as that term is defined in Rule 501(a) of Regulation D ("Regulation
D") as promulgated by the SEC under the Securities Act (an "Accredited
Investor").
Section 4.5 Information. Purchaser and its advisors, if any, have been
-----------
furnished with all materials relating to the business, finances and operations
of the Company and materials relating to the offer and sale of the Series A
Preferred Stock which have been requested by Purchaser or its advisors.
Purchaser and its advisors, if any, have been afforded the opportunity to ask
questions of the Company. Neither such inquiries nor any other due diligence
investigation conducted by Purchaser or any of its advisors or representatives
shall modify, amend or affect Purchaser's right to rely on the Company's
representations and warranties contained in Article III. Purchaser understands
-----------
that its investment in the Series A Preferred Stock involves a significant
degree of risk.
Section 4.6 No Brokers. Purchaser has taken no action which would give
----------
rise to any claim by any person for brokerage commissions, finder's fees or
similar payments relating to this Agreement or the transactions contemplated
hereby.
Section 4.7 Ability to Bear the Risk. Purchaser's financial situation
------------------------
is such that Purchaser can afford to bear the economic risk of holding the
Series A Preferred Stock for an indefinite period. Purchaser can afford to
suffer the complete loss of its investment in the Series A Preferred Stock and
has such knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks of an investment in the Series A
Preferred Stock.
Section 4.8 Restricted Securities. Purchaser understands that the
---------------------
Series A Preferred Stock it is purchasing are characterized as "restricted
securities" under the federal securities laws inasmuch as they are being
acquired from the Company in a transaction not involving a public offering and
that, under such laws and applicable regulations, such securities may be resold
without registration under the Securities Act, only in certain limited
circumstances. In connection with the representation in this Section 4.8,
Purchaser represents that it is familiar with Rule 144 of the Securities Act, as
presently in effect, and understands the resale limitations imposed thereby and
by the Securities Act.
Section 4.9 Legends. Purchaser acknowledges that the Series A
-------
Preferred Stock shall bear legends substantially similar to the following:
"THIS STOCK HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES
LAWS BY REASON OF EXEMPTIONS FROM THE REGISTRATION
REQUIREMENTS OF THE ACT AND SUCH STATE SECURITIES LAWS, AND
MAY NOT BE SOLD, PLEDGED, ASSIGNED OR OTHERWISE DISPOSED OF
IN ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
ACT AND APPLICABLE STATE SECURITIES LAWS OR UNLESS, IN THE
OPINION OF COUNSEL TO THE COMPANY, AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE."
ARTICLE V
REGISTRATION RIGHTS
Section 5.1 Demand Registration Rights. (a) At any time after the
--------------------------
Closing Date the holders of seventy-five (75%) percent of the Common Stock
(calculated on an as-converted basis) sold pursuant to this Agreement (the
"Holders" and each a "Holder") shall have the right to request the Company to
prepare and file one registration statement (a "Demand Registration Statement")
covering at least seventy-five (75%) percent of the shares of Common Stock
(calculated on an as-converted basis) sold pursuant to this Agreement (the
"Registrable Shares"). The Company covenants and agrees with Purchaser that,
upon written request of any Holder made pursuant to this Section 5.1 (which
-----------
request shall
15
state the number of Registrable Shares to be so registered and the intended
method of distribution thereof), the Company shall use its best efforts to file
a Demand Registration Statement under the Securities Act, to the extent
necessary to permit their sale or other disposition in accordance with the
intended method of distribution specified in the request of such Holder. The
Company shall not be required to use its best efforts to effect more than one
(1) registration pursuant to this Section 5.1, or on a registration statement
-----------
other than on Form S-3 (but not including a registration statement on Form S-8
or S-4, or their successors, or any other form for a limited purpose, or any
registration statement covering only securities proposed to be issued in
exchange for securities or assets of another corporation).
(b) The Company may postpone for a reasonable period of time,
not to exceed ninety (90) days, the filing or effectiveness of any Demand
Registration Statement if the negotiation or consummation of a transaction is
pending or an event has occurred, which negotiation, consummation or event would
require additional disclosure by the Company in the Demand Registration
Statement of material information which the Company has a bona fide business
---- ----
purpose for keeping confidential and the nondisclosure of which in the Demand
Registration Statement might cause the Demand Registration Statement to fail to
comply with applicable disclosure requirements; provided, however, that the
-------- -------
Company may not delay, suspend or withdraw a Demand Registration Statement for
such reason for more than ninety (90) days or more often than twice during any
period of twelve (12) consecutive months.
(c) Anything in this Agreement to the contrary
notwithstanding, Purchaser shall not offer any Registrable Shares pursuant to
the Demand Registration Statement if such offering would require the Company (i)
to furnish any financial statements other than as of the end of a fiscal quarter
or (ii) to furnish any audited financial statements other than as of the end of
a fiscal year, unless the Holder requesting such registration agrees to bear the
expenses of furnishing such financial statements. In addition to the foregoing,
in the event of a proposed offering by Purchaser pursuant to the Demand
Registration Statement, at such time as any registration statement would be
required to include audited financial statements as of a fiscal year end, the
Company may delay the dissemination of the required notice and the taking of any
action to effect a supplement to the Demand Registration Statement until such
time as such audited financial statements are available in the ordinary course
of business.
(d) Any registration initiated by Holders of Registrable
Shares as a demand registration pursuant to Section 5.1(a) hereof shall not
--------------
count as a demand registration for purposes of Section 5.1(a) hereof (i) unless
--------------
and until such registration shall have become effective or (ii) if such Holders
withdraw their request for a demand registration at any time because such
Holders (A) reasonably believed that the Demand Registration Statement contained
an untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements made therein
not misleading, (B) notified the Company of such fact and requested that the
Company correct such alleged misstatement or omission and (C) the Company has
refused to correct such alleged misstatement or omission.
Section 5.2 Incidental Registration. (a) Whenever the Company proposes
-----------------------
to file a registration statement, at any time and from time to time (a
"Registration"), it will, prior to such filing, give written notice to the
Holders of its intention to do so and, upon the written request of any Holder,
given within fifteen (15) days after the Company provides such notice (which
request shall state the intended method of distribution of such shares), the
Company shall use its best efforts to cause all such shares which the Company
has been requested to include by any Holder, to be included in the Registration;
provided, that the Company shall have the right to postpone or withdraw any
--------
Registration effected pursuant to this Section 5.2 without obligation to any
-----------
Holder; and provided, further, that the Company shall not be required to file
-------- -------
more than two (2) Registrations with respect to Registrable Shares.
(b) In connection with any offering under this Section 5.2
-----------
involving an underwritten offering, if, in the opinion of the underwriters,
inclusion of all, or part of, the shares which any Holder has requested to be
included would materially or adversely affect such public offering, then the
Company may reduce the number of such shares to zero, in the case of a
Registration on Form S-1, and to 33 1/3% of the shares of Common Stock
(calculated on an as-converted basis) issued, in the case of all subsequent
underwritten offerings. In addition, the Company shall not be required to
include any such shares in such
16
underwritten offering unless the Holders thereof accept the terms of the
offering as agreed upon between the Company and the underwriters selected by it,
and execute and deliver an underwriting agreement, and then only in such
quantity as will not, in the opinion of the underwriters, jeopardize the success
of the offering by the Company, as described above. If the number of such shares
to be included in the underwritten offering in accordance with the foregoing is
less than the total number of shares which the Holders have requested to be
included, then the Holders who have requested registration and other holders of
the Common Stock entitled to include shares of Common Stock in such registration
(together with the Holders, the "Selling Shareholders") shall participate in the
underwritten offering pro rata based upon their total ownership of shares of
Common Stock of the Company (calculated on an as-converted basis). If any Holder
would thus be entitled to include more shares than such Holder requested to be
registered, the excess shall be allocated among the Selling Shareholders pro
rata based upon their total ownership of shares of Common Stock of the Company
(calculated on an as-converted basis).
Section 5.3 Registration Procedures. (a) If and whenever the Company is
-----------------------
required by the provisions of this Agreement to effect the registration of any
of the Registrable Shares under the Securities Act, the Company shall:
(i) file with the SEC a registration statement with
respect to such Registrable Shares and use its best efforts to cause that
registration statement to become and remain effective;
(ii) as expeditiously as possible, prepare and file with
the SEC any amendments and supplements to the registration statement and the
prospectus included in the registration statement as may be necessary to keep
the registration statement effective until such Registrable Shares are sold;
(iii) as expeditiously as possible, furnish to each seller
of Registrable Shares such reasonable number of copies of the prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as each seller of Registrable Shares
may reasonably request in order to facilitate the public sale or other
disposition of the Registrable Shares owned by each seller of Registrable
Shares; and
(iv) as expeditiously as possible, use its best efforts to
register or qualify the Registrable Shares covered by the registration statement
under the securities or Blue Sky laws of such states as each seller of
Registrable Shares shall reasonably request, and do any and all other acts and
things that may be necessary or desirable to enable each seller of Registrable
Shares to consummate the public sale or other disposition in such states of the
Registrable Shares owned by each seller of Registrable Shares; provided,
--------
however, that the Company shall not be required in connection with this clause
-------
(iv) to qualify as a foreign corporation or execute a general consent to service
of process in any jurisdiction.
(b) If the Company has delivered preliminary or final
prospectuses to each seller of Registrable Shares, and after having done so the
prospectus is amended to comply with the requirements of the Securities Act, the
Company shall promptly notify each seller of Registrable Shares and, if
requested, each seller of Registrable Shares shall immediately cease making
offers of Registrable Shares and return all prospectuses to the Company. The
Company shall promptly provide each seller of Registrable Shares with revised
prospectuses and, following receipt of the revised prospectuses, each seller of
Registrable Shares shall be free to resume making offers of the Registrable
Shares.
Section 5.4 Allocation of Expenses. (a) The Company will pay all
----------------------
registration expenses of all registrations under this Agreement. Each seller of
Registrable Shares will pay all underwriting discounts on the Registrable
Shares, selling commissions on the Registrable Shares and the fees and expenses
of the Selling Shareholder's own counsel (other than the counsel selected to
represent all sellers of Registrable Shares as contemplated by Section 5.4 (b)
---------------
below). All other expenses of registered offerings shall be borne pro rata among
each seller of Registrable Shares and, if it participates, the Company.
17
(b) Registration expenses shall include all expenses incurred
by the Company in complying with this Article V, including, without limitation,
---------
all registration and filing fees, exchange listing fees, printing expenses, fees
and disbursements of counsel for the Company and the fees and expenses of one
counsel selected by a majority of all sellers of Registrable Shares, state Blue
Sky fees and expenses, and the expense of accountants and any special audits
incident to or required by any such registration.
Section 5.5 Indemnification. (a) In the event of any registration of
---------------
any of the Registrable Shares under the Securities Act pursuant to this
Agreement, the Company will indemnify and hold harmless the seller of such
Registrable Shares, each underwriter of such Registrable Shares, and each other
person, if any, who controls such seller or underwriter within the meaning of
the Securities Act or the Exchange Act, against any losses, claims, damages or
liabilities, joint or several, to which such seller, underwriter or controlling
person may become subject under the Securities Act, the Exchange Act, state
securities or Blue Sky Laws or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in any registration statement under which such Registrable Shares were
registered under the Securities Act, any preliminary prospectus or final
prospectus contained in the registration statement, or any amendment or
supplement to such registration statement, or arise out of or are based upon the
omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading; and the
Company will reimburse such seller, underwriter and each such controlling person
for any legal or any other expenses reasonably incurred by such seller,
underwriter or controlling person in connection with investigating or defending
any such loss, claim, damage, liability or action; provided, however, that the
-------- -------
Company will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon any untrue statement
or omission made in such registration statement, preliminary prospectus or
prospectus, or any such amendment or supplement, in reliance upon and in
conformity with information furnished to the Company, in writing, by or on
behalf of such seller, underwriter or controlling person specifically for use in
the preparation thereof.
(b) In the event of any registration of any of the Registrable
Shares under the Securities Act pursuant to this Agreement, each seller of
Registrable Shares, severally and not jointly, will indemnify and hold harmless
the Company, each of its directors and officers and each underwriter (if any)
and each person, if any, who controls the Company or any such underwriter within
the meaning of the Securities Act or the Exchange Act, against any losses,
claims, damages or liabilities, joint or several, to which the Company, such
directors and officers, underwriter or controlling person may become subject
under the Securities Act, Exchange Act, state securities or Blue Sky Laws or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in any registration statement
under which such Registrable Shares were registered under the Securities Act,
any preliminary prospectus or final prospectus contained in the registration
statement, or any amendment or supplement to the registration statement, or
arise out of or are based upon any omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statement
therein not misleading, if the statement or omission was made in reliance upon
and in conformity with information furnished in writing to the Company by or on
behalf of such seller, specifically for use in connection with the preparation
of such registration statement, prospectus, amendment or supplement; provided,
--------
that each seller's liability hereunder with respect to any registration shall be
limited to an amount equal to the net proceeds received by such seller from the
Registrable Shares sold by such seller pursuant to such Registration Statement.
Section 5.6 Contribution. If the indemnification provided for in this
------------
Article V is unavailable to the indemnified parties in respect of any losses,
---------
claims, damages, liabilities or judgments referred to herein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities and judgments in such proportion as
to reflect the relative fault of the Company on the one hand and each seller of
Registrable Shares on the other in connection with the statements, omissions or
acts which resulted in such losses, claims, damages, liabilities or judgments,
as well as any other relevant equitable considerations. The relative fault of
the Company on the one hand and of each seller of
18
Registrable Shares on the other shall be determined by reference to, among other
things, the acts of the Company and of each seller of Registrable Shares that
gave rise to the losses, claims, damages, liabilities or judgments referred to
herein, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by such party, and the party's relative intent, knowledge, access to
information and opportunity to correct; provided, however, that no person guilty
of fraudulent misrepresentation (within the meaning of subsection 11 (f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation).
Section 5.7 Indemnification with Respect to Underwritten Offering. In
-----------------------------------------------------
the event that Registrable Shares are sold pursuant to a registration statement
in an underwritten offering pursuant to Section 5.1 or Section 5.2 of this
----------- -----------
Agreement, the Company agrees to enter into an underwriting agreement containing
customary representations and warranties with respect to the business and
operations of the Company and customary covenants and agreements to be performed
by the Company, including without limitation customary provisions with respect
to indemnification by the Company of the underwriters of such offering.
Section 5.8 Information by Holder. Each Holder of Registrable Shares
---------------------
included in any registration shall furnish to the Company such information
regarding such Holder and the distribution proposed by such Holder as the
Company may request in writing and as shall be required in connection with any
registration, qualification or compliance referred to in this Article V.
---------
Section 5.9 "Stand-Off" Agreement. Any Holder, if requested by the
--------------------
Company and an underwriter of Common Stock or other securities of the Company in
connection with an offering of the Company's Common Stock, shall agree not to
sell or otherwise transfer or dispose of any Registrable Shares or other
securities of the Company held by such Holder for such period not to exceed 180
days following the effective date of a registration statement covering shares of
the Company's common stock; provided, that all investors in capital stock of the
--------
Company holding not less than the number of shares of Common Stock held by the
Holder, and all officers and directors of the Company, enter into similar
agreements. Such agreement shall be in writing in a form satisfactory to the
Company and such underwriter. The Company may impose stop-transfer instructions
with respect to the Registrable Shares or other securities until the end of the
stand-off period, subject to the foregoing restriction.
ARTICLE VI
COVENANTS
Section 6.1 Best Efforts. The parties shall use their reasonable best
------------
efforts to satisfy in a timely fashion each of the conditions described in
Article VII.
-----------
Section 6.2 Ordinary Course of Business.
---------------------------
(a) From the date hereof until the Closing, except as
otherwise required or expressly permitted pursuant to this Agreement, the
Company shall, and shall cause its subsidiaries to, carry on their respective
businesses in the ordinary course and in substantially the same manner as
heretofore conducted. Without limiting the generality of the foregoing, the
Company shall, and shall cause its subsidiaries to, use all commercially
reasonable efforts to: (i) preserve intact their present business organizations
and goodwill and preserve the goodwill and relationships with customers, and
others having significant business dealings with them; (ii) subject to prudent
management of workforce needs and ongoing programs currently in force, keep
available the services of its present officers and employees as a group
(provided, that voluntary terminations of employment by officers or employees
shall not be deemed a violation of this subsection); (iii) maintain and keep
material properties and assets in as good repair and condition as at present,
subject to ordinary wear and tear, and maintain supplies and inventories in
quantities consistent with past practice; and (iv) comply in all material
respects with all laws and orders of all Governmental Authorities applicable to
it. From the date hereof until the Closing, neither the
19
Company nor its subsidiaries shall enter into any commitments or expend any
capital in excess of $12,500 or $50,000 in the aggregate without the prior
written approval of Purchaser.
(b) Except as otherwise expressly contemplated by this
Agreement or as set forth in Section 6.2(b) of the Company Disclosure Schedule
--------------
or with the prior written consent of Purchaser, from the date hereof until the
Closing the Company and its subsidiaries shall not:
(i) declare, set aside, make or pay any dividend or
other distribution in respect of the capital stock of the Company or repurchase,
redeem or otherwise acquire any outstanding shares of the capital stock or other
securities of, or other ownership interests in, the Company or any of its
subsidiaries;
(ii) transfer, issue, sell or dispose of any shares of
capital stock or other securities of the Company or any of its subsidiaries or
grant options, warrants, calls or other rights to purchase or otherwise acquire
shares of the capital stock or other securities of the Company or any of its
subsidiaries;
(iii) effect any recapitalization, reclassification,
stock split or like change in the capitalization of the Company or any of its
subsidiaries;
(iv) amend the certificate of incorporation or by-laws
of the Company or any of its subsidiaries;
(v) (A) increase the annual level of compensation of
any employee of the Company or any of its subsidiaries, (B) increase the annual
level of compensation payable or to become payable by the Company or any of its
subsidiaries to any of their respective executive officers, (C) grant any
unusual or extraordinary bonus, benefit or other direct or indirect compensation
to any employee, director or consultant, other than in the ordinary course
consistent with past practice and in such amounts as are fully reserved against
in the Company Financial Statements, (D) increase the coverage or benefits
available under any (or create any new) severance pay, termination pay, vacation
pay, company awards, salary continuation for disability, sick leave, deferred
compensation, bonus or other incentive compensation, insurance, pension or other
employee benefit plan or arrangement made to, for, or with any of the directors,
officers, employees, agents or representatives of the Company or any of its
subsidiaries, or otherwise modify or amend or terminate any such plan or
arrangement or (E) enter into any employment, deferred compensation, severance,
consulting, non-competition or similar agreement (or amend any such agreement)
to which the Company or any of its subsidiaries is a party or involving a
director, officer or employee of the Company or any of its subsidiaries in his
or her capacity as a director, officer or employee of the Company or any of its
subsidiaries;
(vi) except for trade payables and for indebtedness for
borrowed money incurred in the ordinary course of business and consistent with
past practice, borrow monies for any reason or draw down on any line of credit
or debt obligation, or become the guarantor, surety, endorser or otherwise
liable for any debt, obligation or liability (contingent or otherwise) of any
other person;
(vii) subject to any lien (except for leases that do not
materially impair the use of the property subject thereto in their respective
businesses as presently conducted), any of the properties or assets (whether
tangible or intangible) of the Company or any of its subsidiaries;
(viii) acquire any material properties or assets or sell,
assign, transfer, convey, lease or otherwise dispose of any of the material
properties or assets (except for fair consideration in the ordinary course of
business consistent with past practice) of the Company and its subsidiaries
except as previously consented to by Purchaser;
(ix) cancel or compromise any debt or claim or waive or
release any material right of the Company or any of its subsidiaries, except in
the ordinary course of business consistent with past practice;
20
(x) introduce any material change with respect to the
operation of the Company or any of its subsidiaries, including any material
change in the type, nature, composition or quality of its products or services,
experience any material change in any contribution of its product lines to its
revenues or net income, or, other than in the ordinary course of business, make
any change in product specifications or prices or terms of distributions of such
products;
(xi) permit the Company or any of its subsidiaries to
enter into any transaction or to make or enter into any contract which by reason
of its size or otherwise is not in the ordinary course of business consistent
with past practice;
(xii) permit the Company or any of its subsidiaries to
enter into or agree to enter into any merger or consolidation with any
corporation or other entity, or engage in any new business or invest in, make a
loan, advance or capital contribution to, or otherwise acquire the securities of
any other person;
(xiii) except for transfers of cash pursuant to normal
cash management practices, permit the Company or any of its subsidiaries to make
any investments in or loans to, or pay any fees or expenses to, or enter into or
modify any contract with, any stockholders of the Company; or
(xiv) agree to do anything prohibited by this Section
-------
6.2 of the Agreement or anything which would make any of the representations and
---
warranties of the Company in this Agreement untrue or incorrect in any material
respect as of any time through and including the Closing Date.
Section 6.3 Non-Interference. None of the parties shall cause to occur
----------------
any act, event or condition which would cause any of their respective
representations and warranties made in this Agreement to be or become untrue or
incorrect in any material respect as of the Closing Date, or would interfere
with, frustrate or render unreasonably expensive the satisfaction by the other
party or parties of any of the conditions precedent set forth in Article VII.
-----------
Section 6.4 Board Representation. As of the Closing Date, Purchaser
--------------------
shall have the right to designate for appointment to the Board of Directors Xxxx
Xxxxxxxxxx, Xxxxxx Xxxxx, Xxxxxx Xxxxx and two additional outside directors to
the Board of Directors. Such designees shall be out of a total number of no more
than seven (7) directors as of the Closing Date and the Company shall use all
reasonable efforts to have such nominees elected.
Section 6.5 Regulatory Approvals. The parties shall use their best
--------------------
efforts to obtain all necessary statutory approvals and consents, and other
approvals and consents of any regulatory body or Governmental Authority.
Section 6.6 Access to Information. From the date hereof to the Closing
---------------------
Date, Purchaser and its representatives shall be entitled, upon reasonable
notice, to make such investigation of the properties, businesses and operations
of the Company and such examination of the books, records and financial
condition of the Company as they reasonably request and to make extracts and
copies of such books and records, and the Company shall cooperate fully
therewith.
Section 6.7 Negotiations with Others. Subject to the provisions set
------------------------
forth in Section 8.1, from and after the date hereof until the Closing Date or
-----------
the earlier termination of this Agreement, the Company and its representatives
or agents shall not, without the written consent of Purchaser, whose consent
shall not be unreasonable withheld, directly or indirectly, encourage, solicit,
initiate or participate in discussions or negotiations with, or provide any
information to, any individual, corporation, partnership, or other person,
entity or group concerning the herein contemplated transactions.
Section 6.8 Amex Listing. The Company shall use its best efforts to
------------
cause the shares of Common Stock issuable in connection with the Series A
Preferred Stock to be approved for listing or admitted for trading on Amex,
subject to official notice of issuance, prior to the Closing Date.
21
Section 6.9 Continuation of Insurance.
-------------------------
(a) For a period of three (3) years after the Closing Date,
the Company shall maintain in effect the current policies of directors' and
officers' liability insurance maintained by the Company to the extent that such
policies provide coverage for the Company's directors and officers (or policies
of at least the same coverage and amounts containing terms and conditions that
are no less advantageous) with respect to claims arising from facts or events
that occurred before the Closing Date; provided that the Company shall not be
required to maintain such policies to the extent that the annual premiums (or
incremental annual premiums in the case of substitute policies that provide
coverage to other persons or for other matters) exceed 200% of the most recent
annual premium paid for such policies by the Company.
(b) The Company shall remain liable for any indemnification
obligations to its current directors and officers in all capacities, in which
such directors or officers served the Company prior to the Closing Date, as set
forth in the Company's articles of incorporation and by-laws as they exist on
the date hereof to the extent such indemnification by the Company is permitted
under the Delaware General Corporation Law. The Company shall not amend the
provisions of its articles of incorporation and by-laws pertaining to such
obligations for a period of three (3) years after the Closing Date.
(c) If, after the Closing Date, the Company or any of its
successors or assigns (i) consolidates with or merges into any other person and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger, or (ii) transfers or conveys all or substantially all
of its properties and assets to any person, then, and in each such case, to the
extent necessary, proper provision shall be made so that the successors and
assigns of the Company assume the obligations set forth in this Section 6.9.
-----------
(d) The provisions of this Section 6.9 are intended to be for
-----------
the benefit of, and shall be enforceable by, each indemnified party and his or
her heirs and representatives.
ARTICLE VII
CONDITIONS TO CLOSING
Section 7.1 Conditions to Each Party's Obligation to Effect the
---------------------------------------------------
Closing.
-------
The respective obligations of the Company and Purchaser to consummate
the Closing shall be subject to the satisfaction of the following conditions on
or prior to the Closing Date:
(a) No Injunction. No temporary restraining order or
-------------
preliminary or permanent injunction or other order by any Federal or state court
preventing consummation of the transactions contemplated herein shall have been
issued and continuing in effect, and none of the transactions contemplated
herein shall have been prohibited under any applicable Federal or state law or
other regulation.
(b) Regulatory and Statutory Approvals/Consents. All necessary
-------------------------------------------
statutory approvals and consents of any regulatory body or Governmental
Authority including, without limitation, compliance with Section 14(f) under the
Exchange Act, and any other approvals and consents, shall have been obtained at
or prior to the Closing Date, such approvals shall have become Final Orders (as
hereinafter defined), and no Final Order shall impose terms or conditions that
would have, or would be reasonably likely to have, a Purchaser Material Adverse
Effect or a Company Material Adverse Effect. A "Final Order" means a
determination by the relevant regulatory authority that has not been reversed,
stayed, enjoined, set aside, annulled or suspended, with respect to which any
waiting period prescribed by law before the transactions contemplated hereby may
be consummated has expired, and as to which all conditions to the consummation
of such transactions prescribed by law, regulation or order have been satisfied.
22
(c) Certain Indebtedness. Any outstanding debt obligations
--------------------
between SAR or Xxxxxx X. Xxxxxx ("RHD") on the one hand and the Company or the
Broker-Dealer Subsidiary on the other hand, shall be treated as provided in the
Consulting Agreements (as defined below).
(d) SAR Purchase Agreement. The SAR Purchase Agreement shall
----------------------
have been duly executed, delivered and consummated by the parties thereto.
(e) Exchange Agreement. The Exchange Agreement shall have been
------------------
duly executed, delivered and consummated by the parties thereto.
(f) Amex Listing. The shares of Common Stock issuable in
------------
connection with the Series A Preferred Stock shall have been approved for
listing or admitted for trading on Amex.
(g) First Clearing. The Company shall have modified the
--------------
shareholders' equity covenant in the transaction with First Clearing to no
greater than $2 million and shall have obtained the consent of First Clearing
with respect to the transactions contemplated hereby.
Section 7.2 Conditions Precedent to Obligation of the Company.
-------------------------------------------------
The obligation of the Company to consummate the Closing is additionally
subject to the satisfaction of the following conditions on or prior to the
Closing Date (unless expressly waived in writing by the Company on or prior to
the Closing Date):
(a) Compliance by Purchaser. All of the terms, covenants and
-----------------------
conditions of this Agreement to be complied with and performed by Purchaser on
or prior to the Closing Date shall have been complied with and performed by it
in all material respects, and the representations and warranties made by
Purchaser in this Agreement shall be true and correct in all material respects
on and as of the Closing Date with the same force and effect as though such
representations and warranties had been made on and as of the Closing Date,
except that any such representations and warranties that are given as of a
particular date or period and relate solely to a particular date or period shall
be true and correct as of such date or period.
(b) Compliance Certificate. The Purchaser shall deliver to the
----------------------
Company a certificate, dated the Closing Date and signed by an executive officer
of the Purchaser, certifying that the conditions specified in Section 7.2(a)
--------------
have been satisfied.
(c) No Purchaser Material Adverse Effect. No Purchaser
------------------------------------
Material Adverse Effect shall have occurred and there shall exist no fact or
circumstance that would have, or would be reasonably likely to have, a Purchaser
Material Adverse Effect.
(d) Xxxxxxxxxx. Xxxxxxxxxx shall have assigned his ownership
----------
interest hereunder to a United States corporate or limited liability entity
under his control (the "Xxxxxxxxxx Entity").
Section 7.3 Conditions to the Obligation of Purchaser. The obligation
-----------------------------------------
of Purchaser to consummate the Closing is additionally subject to the
satisfaction of the following conditions on or prior to the Closing Date (unless
expressly waived in writing by Purchaser on or prior to the Closing Date):
(a) Compliance by the Company. All of the terms, covenants and
-------------------------
conditions of this Agreement to be complied with and performed by the Company on
or prior to the Closing Date shall have been complied with and performed by it
in all material respects, and the representations and warranties made by the
Company in this Agreement shall be true and correct in all material respects on
and as of the Closing Date with the same force and effect as though such
representations and warranties had been made on and as of the Closing Date,
except that any such representations and warranties that are given as of a
particular date or period and relate solely to a particular date or period shall
be true and correct as of such date or period.
23
(b) Compliance Certificate. The Company shall deliver to
----------------------
Purchaser a certificate, dated the Closing Date and signed by an executive
officer of the Company, certifying that the conditions specified in Section
-------
7.3(a) have been satisfied.
------
(c) No Company Material Adverse Effect. No Company Material
----------------------------------
Adverse Effect shall have occurred and there shall exist no fact or circumstance
that would have, or would be reasonably likely to have, a Company Material
Adverse Effect.
(d) Consulting Agreements/Employment Agreements. The Company
-------------------------------------------
and the Broker-Dealer Subsidiary shall have (i) entered consulting contracts
substantially in the form of Exhibit B (the "Consulting Agreements") annexed
---------
hereto and made a part hereof with each of SAR and RHD (collectively, the
"Consultants") relating, in part, to the waiver of certain "change of control"
provisions provided in the Consultants' existing employment agreements and (ii)
amended the existing employment agreements of Xxxxxxx X. Xxxxxxx and Xxxxx X.
Xxxxxxxx to waive certain "change of control" provisions thereunder, which
agreements shall be effective immediately at the Closing Date in accordance with
their respective terms.
(e) Filing of Certificate of Designations. The Series A
-------------------------------------
Certificate of Designations shall have been filed with and accepted by the
Secretary of State of the State of Delaware.
(f) Material Adverse Change. There shall have been no Company
-----------------------
Material Adverse Effect or a material adverse change in the capital markets
generally.
(g) Legal Opinion. Purchaser shall have received an opinion
-------------
addressed to Purchaser from the Xxxxxxxxx Traurig, LLP, special counsel to the
Company, in a form reasonably acceptable to Purchaser.
(h) The Company's 10-K. At or immediately prior to the
------------------
Closing, the Company shall have filed its Form 10-K for the year ended September
28, 2001 with the SEC.
(i) American National Bank. The Company shall have obtained
----------------------
the consent of American National Bank and Trust Company of Chicago with respect
to the transactions contemplated hereby.
ARTICLE VIII
TERMINATION
Section 8.1 General. This Agreement may be terminated and the
-------
transactions contemplated hereby may be abandoned at any time prior to the
Closing:
(a) by the mutual written consent of Purchaser and the
Company; or
(b) by either Purchaser or the Company, at any time on or
after December 31, 2001, if the transactions contemplated hereby shall not have
been consummated prior thereto; provided, that, the party seeking to effect such
--------
termination of this Agreement shall not then be in breach or default of any
material representation, warranty, covenant, agreement or obligation imposed
upon such party by this Agreement; provided, further, that in the event the
Company (i) terminates this Agreement pursuant to this Section 8.1(b) and (ii)
--------------
enters into or consummates any Takeover Proposal (as defined below) on or before
June 30, 2002, the Company shall pay Purchaser an amount equal to Three Hundred
Thousand Dollars ($300,000) in immediately available funds;
(c) by either Purchaser on the one hand, and the Company on
the other hand, if there has been a material misrepresentation, breach of
warranty or breach of covenant by the other party with respect to any
representations, warranties and covenants set forth in this Agreement; or
24
(d) by the Company if it shall approve or recommend any
Takeover Proposal (as defined below) by a party other than Purchaser or any of
its affiliates. "Takeover Proposal" shall mean, with respect to the Company, any
-----------------
inquiry, proposal or offer from any person relating to any merger, acquisition,
consolidation, reorganization, share exchange, tender offer, exchange offer or
similar transaction involving the Company or any proposal or offer to acquire in
any manner, directly or indirectly (x) ten percent (10%) or more of the
outstanding Company Common Stock or (y) all or a substantial portion of the
assets of the Company and its subsidiaries taken as a whole which is in the
opinion of the Board of Directors of the Company superior to the transactions
contemplated by this Agreement; provided, however that in the event the Company
terminates this Agreement pursuant to this Section 8.1(d) on or prior to June
--------------
30, 2002, the Company shall pay Purchaser an amount equal to Three Hundred
Thousand Dollars ($300,000) in immediately available funds.
Section 8.2 Effect of Termination. In the event of termination of this
---------------------
Agreement pursuant to this Article VIII, prompt written notice shall be given by
------------
the terminating party to the other parties hereto, and, unless the party seeking
to terminate this Agreement shall have no right to do so, no party to this
Agreement shall have any further liability to any other parties hereto.
ARTICLE IX
INDEMNIFICATION
Section 9.1 Indemnification by the Company. The Company shall
------------------------------
indemnify and hold harmless the Purchaser from and against, and shall reimburse
the Purchaser for, any Damages which may be sustained, suffered or incurred by
it, whether as a result of any Third Party Claim or otherwise, and which arise
from or in connection with or are attributable to the breach of any of the
covenants, representations, warranties, agreements, obligations or undertakings
of the Company contained in this Agreement or in any schedule, exhibit,
certificate or agreement referred to therein or otherwise furnished in
connection therewith. This indemnity shall survive the Closing for a period of
one year after the Closing Date, except that with respect to Claims arising as a
result of a breach of the representations and warranties in Section 3.15, it
------------
shall survive until the expiration of the statute of limitations for each
respective Tax. Any Claim for indemnity asserted within the relevant period
shall survive until resolved. As used herein, "Damages" means the dollar amount
of any loss, damage, expense or liability, including, without limitation,
reasonable attorneys' fees and disbursements incurred by an Indemnified Party in
any action or proceeding between the Indemnified Party and the Indemnifying
Party or between the Indemnified Party and a third party, which is determined
(as provided in Article IX) to have been sustained, suffered or incurred by a
----------
Party and to have arisen from an event or state of facts which is subject to
indemnification under this Agreement or the amount agreed to upon settlement in
accordance with the terms of this Agreement, if a Third Party Claim, or by the
Parties, if a Direct Claim. For purposes hereunder the amount of Damages deemed
to be sustained by Purchaser shall be the amount equal to the costs incurred by
the Company with respect to any such action or proceeding in excess of the
insurance coverage therefor multiplied by Purchaser's "Ownership Percentage." As
used herein, the "Purchaser's Ownership Percentage" means the percentage,
expressed as a decimal fraction, of the outstanding Company Common Stock owned
by Purchaser and its Affiliates, on an as-converted basis, at the time it
asserts the Claim.
Section 9.2 Indemnification by the Purchaser. Purchaser shall
--------------------------------
indemnify and hold harmless the Company from and against, and shall reimburse
the Company for, any Damages which may be sustained, suffered or incurred by the
Company, whether as a result of Third Party Claim or otherwise, and which arise
or result from or in connection with or are attributable to the breach of any of
the Purchaser's covenants, representations, warranties contained in this
Agreement. This indemnity shall survive the Closing for a period of one year
after the Closing Date.
Section 9.3 Notice, etc. A party required to make an indemnification
-----------
payment pursuant to this Agreement ("Indemnifying Party") shall have no
liability with respect to Third Party Claims or otherwise with respect to any
covenant, representation, warranty, agreement, undertaking or obligation under
this Agreement, unless the party entitled to receive such indemnification
payment ("Indemnified
25
Party") gives notice to the Indemnifying Party in accordance with terms hereof,
as soon as practical following the time at which the Indemnified Party
discovered such Claim (except to the extent the Indemnifying Party is not
prejudiced by any delay in the delivery of such notice) and in any event prior
to the applicable date specified in Section 9.1 or 9.2, specifying (i) the
------------------
covenant, representation or warranty, agreement, undertaking or obligation
contained herein which it asserts has been breached, (ii) in reasonable detail,
the nature and dollar amount of any Claim the Indemnified Party may have against
the Indemnifying Party by reason thereof under this Agreement, and (iii) whether
or not the Claim is a Third Party Claim. All Claims by any Indemnified Party
under this Article IX shall be asserted and resolved as follows:
----------
(a) Third-Party Claims.
------------------
(i) In the event that an Indemnified Party becomes aware of a
Third Party Claim for which an Indemnifying Party would be liable to an
Indemnified Party hereunder, the Indemnified Party shall with reasonable
promptness notify in writing the Indemnifying Party of such Claim, identifying
the basis for such Claim or demand, and the amount or the estimated amount
thereof to the extent then determinable (which estimate shall not be conclusive
of the final amount of such Claim and demand; the "Claim Notice"); provided,
however, that any failure to give such Claim Notice will not be deemed a waiver
of any rights of the Indemnified Party except to the extent the rights of the
Indemnifying Party are actually prejudiced by such failure. The Indemnifying
Party will notify the Indemnified Party as soon as practicable whether the
Indemnifying Party desires, at its sole cost and expense, to defend the
Indemnified Party against such Third Party Claim. If the Indemnifying Party
notifies the Indemnified Party that the Indemnifying Party desires to defend the
Indemnified Party with respect to the Third Party Claim pursuant to this Section
-------
9.3(a), the Indemnifying Party shall retain counsel (who shall be reasonably
------
acceptable to the Indemnified Party) to represent the Indemnified Party and the
Indemnifying Party shall pay the reasonable fees and disbursements of such
counsel with regard thereto; provided, however, that any Indemnified Party is
hereby authorized, prior to the date on which it receives written notice from
the Indemnifying Party designating such counsel, to retain counsel, whose fees
and expenses shall be at the expense of the Indemnifying Party, to file any
motion, answer or other pleading and take such other action which it reasonably
shall deem necessary to protect its interests or those of the Indemnifying
Party. After the Indemnifying Party shall retain such counsel, the Indemnified
Party shall have the right to retain its own counsel, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party unless (x) the
Indemnifying Party and the Indemnified Party shall have mutually agreed to the
retention of such counsel or (y) the named parties of any such proceeding
(including any impleaded parties) include both the Indemnifying Party and the
Indemnified Party and representation of both parties by the same counsel would
be inappropriate because a conflict or potential conflict exists between the
Indemnifying Party and the Indemnified Party which makes representation of both
Parties inappropriate under applicable standards of professional conduct. The
Indemnifying Party shall not, in connection with any proceedings or related
proceedings in the same jurisdiction, be liable for the fees and expenses of
more than one such firm for the Indemnified Party (except to the extent the
Indemnified Party retained counsel to protect its (or the Indemnifying Party's)
rights prior to the selection of counsel by the Indemnifying Party). If
requested by the Indemnifying Party, the Indemnified Party agrees to cooperate
with the Indemnifying Party and its counsel in contesting any claim or demand
which the Indemnifying Party defends or, if appropriate and related to the Third
Party Claim in question, in making any counterclaim against the Person asserting
the Third Party Claim or any cross-complaint against any Person (other than the
Indemnified Party or any of its Affiliates). A Claim or demand may not be
settled by either party without the prior written consent of the other party
(which consent will not be unreasonably withheld or delayed) unless, as part of
such settlement, the Indemnified Party shall receive a full and unconditional
release reasonably satisfactory to the Indemnifying Party. Notwithstanding the
foregoing, the Indemnifying Party shall not settle any claim without the prior
written consent of the Indemnified Party if such Claim is not exclusively for
monetary Damages.
(ii) If the Indemnifying Party fails to notify the Indemnified
Party that the Indemnifying Party desires to defend the Third Party Claim
pursuant to the preceding paragraph then the Indemnified Party will have the
right to defend, at the sole cost and expense of the Indemnifying Party, the
Third Party Claim by all appropriate proceedings, which proceedings will be
vigorously and diligently
26
prosecuted by the Indemnified Party to a final conclusion or will be settled at
the discretion of the Indemnified Party (with the consent of the Indemnifying
Party, which consent will not be unreasonably withheld). The Indemnified Party
will have full control of such defense and proceedings, including (except as
provided in the immediately preceding sentence) any settlement thereof;
provided, however, that if requested by the Indemnified Party, the Indemnifying
-------- -------
Party will, at the sole cost and expense of the Indemnifying Party, cooperate
with the Indemnified Party and its counsel in contesting any Third Party Claim
which the Indemnified Party is contesting, or, if appropriate and related to the
Third Party Claim in question, in making any counterclaim against the Person
asserting the Third Party Claim, or any cross-complaint against any Person
(other than the Indemnifying Party or any of its Affiliates). Notwithstanding
the foregoing provisions of this paragraph, if the Indemnifying Party has
notified the Indemnified Party that the Indemnifying Party disputes its
liability hereunder to the Indemnified Party with respect to such Third Party
Claim and if such dispute is resolved in favor of the Indemnifying Party the
Indemnifying Party will not be required to bear the costs and expenses of the
Indemnified Party's defense pursuant to this paragraph or of the Indemnifying
Party's participation therein at the Indemnified Party's request, and the
Indemnified Party will reimburse the Indemnifying Party in connection with such
litigation. The Indemnifying Party may retain separate counsel to represent it
in, but not control, any defense or settlement controlled by the Indemnified
Party pursuant to this paragraph, and the Indemnifying Party will bear its own
costs and expenses with respect to such participation.
(b) Direct Claims. In the event any Indemnified Party shall have a
-------------
Direct Claim against any Indemnifying Party hereunder, the Indemnified Party
shall send a Claim Notice with respect to such Claim to the Indemnifying Party.
(c) Books and Records. After delivery of a Claim Notice, so long as any
-----------------
right to indemnification exists pursuant to this Article IX, the affected
----------
parties each agree to retain all books and records related to such Claim Notice.
In each instance, the Indemnified Party shall have the right to be kept fully
informed by the Indemnifying Party and its legal counsel with respect to any
legal proceedings.
Section 9.4 Payment/Offset. If the Escrow Amount has not yet been
--------------
funded to the Company, and notwithstanding anything contained herein to the
contrary, Purchaser shall have the option to be relieved of its obligations from
the Escrow Amount on a dollar-for-dollar basis upon proper written notice to the
Company and the Escrow Agent, if applicable. Alternatively, any payment of the
indemnity obligations of the Company set forth in Section 9.1 may be made, at
-----------
the option of Purchaser, by the Company issuing shares of the Company's Common
Stock, which shares, for such purpose, shall be valued at the Market Price (as
defined below) of the Common Stock on the date such liability is finally
determined, provided that, if the Common Stock is then listed on an exchange and
the exchange requires that such value be determined as the greater of the Market
Price or the per share book value, the value shall be determined as such greater
amount. Such shares shall be delivered promptly after such liability is finally
determined. As used herein, "Market Price" means, with respect to a particular
date, the average closing price of the Company's Common Stock for the five (5)
trading days ending on the trading day before such date, as reported by The Wall
Street Journal, but in no event less than $1.50 per share.
Section 9.5 Limitations.
-----------
(a) Other than for Claims under Sections 3.9 and 4.6 (as to
which the below-referenced "basket" shall not apply), no Party shall be required
to indemnify another Party under this Article IX for Claims for breaches of
representations or warranties unless the aggregate of all amounts for which
indemnity would otherwise be due against it exceeds the sum of $25,000, in which
case the amount for which indemnity shall be due shall be equal to the excess
over that amount.
(b) The maximum aggregate liability of the Company for all
Claims pursuant to this Article IX shall be $1,000,000.
Section 9.6 Representations and Warranties. For purposes of indemnity
------------------------------
under this Article IX for breach of a representation or warranty of a party, the
----------
representations and warranties shall be the representations and warranties of a
party made herein as of the date hereof, and shall be deemed to be
27
made again as of the Closing Date without regard to supplementation,
modification or amendment, and in each instance without regard to any
materiality qualifications or standards otherwise contained therein.
ARTICLE X
GOVERNING LAW; MISCELLANEOUS
Section 10.1 Governing Law. 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 in the State of New York (without regard to
principles of conflict of laws). All of the parties irrevocably consent to the
jurisdiction of the United States Federal courts and the state courts located in
New York with respect to any suit or proceeding based on or arising under this
Agreement, the agreements entered into in connection herewith or the
transactions contemplated hereby or thereby, and irrevocably agree that all
claims in respect of such suit or proceeding may be determined in such courts.
All of the parties irrevocably waive the defense of an inconvenient forum to the
maintenance of such suit or proceeding. All of the parties further agree that
service of process upon a party mailed by first class mail shall be deemed in
every respect effective service of process upon the party in any such suit or
proceeding. Nothing herein shall affect any party's right to serve process in
any other manner permitted by law. All of the parties agree that a final
non-appealable judgment in any such suit or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on such judgment or in any other
lawful manner.
Section 10.2 Counterparts; Signatures by Facsimile. This Agreement may
-------------------------------------
be executed in one or more counterparts, all of which shall be considered one
and the same agreement and shall become effective when counterparts have been
signed by each party and delivered to the other party. This Agreement, once
executed by a party, may be delivered to another party hereto by facsimile
transmission of a copy of this Agreement bearing the signature of the party so
delivering this Agreement.
Section 10.3 Headings. The headings of this Agreement are for
--------
convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement.
Section 10.4 Severability. If any provision of this Agreement shall be
------------
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement or the validity or enforceability of this Agreement
in any other jurisdiction.
Section 10.5 Entire Agreement; Amendments. This Agreement, the
----------------------------
schedules and exhibits hereto and the instruments referenced herein contain the
entire understanding of the parties with respect to the matters covered herein
and therein and, except as specifically set forth herein or therein, neither the
Company nor Purchaser makes any representation, warranty, covenant or
undertaking with respect to such matters. No provision of this Agreement may be
waived or amended other than by an instrument in writing signed by the party to
be charged with enforcement. In no event may the terms of this Agreement be
terminated or amended by the Company except with the unanimous written consent
of all of the independent directors of the Board of Directors of the Company.
Section 10.6 Notices. Any notices required or permitted to be given
-------
under the terms of this Agreement shall be sent by certified or registered mail
(return receipt requested) or delivered personally or by courier (including a
recognized overnight delivery service) or by facsimile and shall be effective
five days after being placed in the mail, if mailed by regular United States
mail, or upon receipt, if delivered personally or by courier (including a
recognized overnight delivery service) or by facsimile, in each case addressed
to a party. The addresses for such communications shall be:
If to the Company:
Xxxx Xxxxxxxxxx
000 Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
28
and
Xxxxxx X. Xxxxxx
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
With a copy to:
Xxxxxxxxx Xxxxxxx, LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Annex, Esq.
Facsimile: (000) 000-0000
If to Purchaser:
Triage Partners LLC
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxx, Co-Manager
Facsimile: (000) 000-0000
With a copy to:
Xxxxxxx Krooks & Xxxx P.C.
000 Xxxxx Xxxxxx, 00xx xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
Each party shall provide notice to the other parties of any
change in address.
Section 10.7 Successors and Assigns. This Agreement shall be
----------------------
binding upon and inure to the benefit of the parties and their successors and
assigns. Neither the Company nor Purchaser shall assign this Agreement or any
rights or obligations hereunder without the prior written consent of the other
parties. Notwithstanding the foregoing, Purchaser may assign its rights
hereunder to (i) any of its "affiliates," as that term is defined under the
Exchange Act and (ii) any person that purchases Series A Preferred Stock in a
private transaction from Purchaser, without the consent of the Company.
Section 10.8 Third Party Beneficiaries. This Agreement is intended
-------------------------
for the benefit of the parties hereto and their respective permitted successors
and assigns, and is not for the benefit of, nor may any provision hereof be
enforced by, any other person.
Section 10.9 Publicity. The Company and Purchaser shall have the
---------
right to review a reasonable period of time before issuance of any press
releases, filings with the SEC, the Amex or any stock exchange or interdealer
quotation system, or any other public statements with respect to the
transactions contemplated hereby; provided, however, that the Company shall be
-------- -------
entitled, without the prior approval of Purchaser, to make any press release or
public filings with respect to such transactions as is required by applicable
law and regulations (although Purchaser shall be consulted by the Company in
connection with any such press release prior to its release and shall be
provided with a copy thereof and be given an opportunity to comment thereon).
Section 10.10 Further Assurances. Each party shall do and perform,
------------------
or cause to be done and performed, all such further acts and things, and shall
execute and deliver all such other agreements,
29
certificates, instruments and documents, as the other party may reasonably
request in order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated hereby.
Section 10.11 No Strict Construction. The language used in this
----------------------
Agreement will be deemed to be the language chosen by the parties to express
their mutual intent, and no rules of strict construction will be applied against
any party.
[The remainder of this page has been intentionally left blank]
30
IN WITNESS WHEREOF, the undersigned Purchaser and the Company have
caused this Agreement to be duly executed as of the date first above written.
OLYMPIC CASCADE FINANCIAL CORPORATION
By:_______________________________
Name:
Title:
__________________________________
Xxxx Xxxxxxxxxx
TRIAGE PARTNERS LLC
By:_______________________________
Name: Xxxxxx Xxxxx
Title: Co-Manager
TRIAGE PARTNERS LLC
By:_______________________________
Name: Xxxxxx Xxxxx
Title: Co-Manager
31
EXHIBIT A
SERIES A CERTIFICATE OF DESIGNATIONS
32
EXHIBIT B
FORM OF CONSULTING AGREEMENT
33
EXHIBIT C
FORM OF ESCROW AGREEMENT
34
