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AGREEMENT
THIS AGREEMENT (the "Agreement") dated as of June 1, 1995, is entered
into by and among NATIONAL SECURITIES CORPORATION, a Washington corporation
("National"), XXXXXX XXXXXX ("Xxxxxx"), and X.X. XXXXXX & COMPANY, INC., a
Massachusetts corporation (the "Company").
W I T N E S S E T H:
WHEREAS, National desires to obtain from the Company, and the Company
desires to transfer to National, all of the Company's existing customer
accounts listed on Schedule 1 ("Customer Accounts"), attached hereto and made a
part hereof;
WHEREAS, National desires to retain the services of all or
substantially all of the Company's brokers/independent sales representatives,
and the Company desires to assist National in retaining the services of all or
substantially all of the Company's brokers/independent sales representatives
listed on Schedule 2 ("Representatives"), attached hereto and made a part
hereof; and
WHEREAS, Stuart is a shareholder of the Company, and in consideration
for National's agreements herein, Stuart is willing to assist National in
consummating the transactions herein and to give National the covenants set
forth herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, National, Stuart and
the Company hereby agree as follows:
STATEMENT OF AGREEMENT
1. RECITALS. The aforementioned recitals are incorporated into
and made a part of this Agreement.
2. ACQUISITION OF CUSTOMER ACCOUNTS, AND REPRESENTATIVES. At the
Closing (as hereinafter defined):
a. The Company shall transfer and/or cause the transfer
of all of the Customer Accounts free and clear of any
and all unsecured debit balances to National.
b. At National's direction, the Company will terminate
or assign to National the registered
representative/agent agreements of, and National
shall have the absolute right and option to obtain
the services of, any or all of the Representatives as
National shall, in its sole and absolute discretion,
determine. In that regard, National shall effectuate
the clearing of trading functions of the
Representatives
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customers through the Company's present clearing
firm, Bear, Xxxxxxx & Co. ("BSC") for a period only
as long as reasonably necessary as determined by
National.
c. The Company shall assist National in (i) causing the
transfer of all of the Customer Accounts to National;
(ii) terminating any of the Representatives,
assigning to National the registered
representative/agent agreements of any
Representatives, or attempting to cause any of the
Representatives to become and/or remain
representatives of National on a going forward basis,
as National shall determine in its sole discretion;
and (iii) in the transfers of the clearing function
firm BSC to National, all as expeditiously as
possible.
d. No assets, tangible or intangible, of the Company
will be purchased by National, unless specifically
described herein.
e. Except as specifically agreed to herein, National
shall not assume, or in any way become liable for,
any liabilities or obligations of the Company of any
kind or nature, whether accrued, absolute, contingent
or otherwise, or whether due or to become due, or
otherwise, whether known or unknown, whether
disclosed or undisclosed, or arising out of events,
transactions, or facts which shall have occurred,
arisen or existed on or prior to the date hereof, or
at any time thereafter, which liabilities and
obligations, if ever in existence, shall continue to
be liabilities and obligations of the Company.
Specifically, but without limiting the foregoing,
National shall not assume, or be liable for any
accounts payable and accrued liabilities of the
Company whether accrued in the ordinary course of the
Company's business or otherwise; debts, obligations
or liabilities which arise or exist in violation of
any of the representations, warranties, covenants or
agreements of the Company or Stuart contained in this
Agreement or in any statement or certificate
delivered to National by or on behalf of the Company;
contingent liabilities of the Company of any kind
arising or existing on or prior to the date hereof or
thereafter, including, but not limited to claims,
proceedings or causes of actions which are currently
or hereafter become, the subject of claims,
assertions, litigation or arbitration; debts,
obligations or liabilities of the Company whether
absolute, accrued, contingent or otherwise, for
federal and state income taxes, all taxes relating to
any real property, all franchise taxes of the
Company, and any other taxes of the Company; any
liability or obligation of the Company arising out of
any wrongful or unlawful violation or infringement of
any proprietary right of any person or entity; any
liabilities or obligations in respect of the
borrowing of money or issuance of any note, bond,
indenture, loan, credit agreement
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or other evidence of indebtedness or direct or
indirect guarantee or assumption of indebtedness,
liabilities or obligations of others, whether or not
disclosed in this Agreement or otherwise of the
Company; and debts, expenses, obligations or
liabilities of the Company arising out of any claim,
action, suit or proceeding pending as of the date
hereof or arising out of or relating to matters or
events occurring on or prior to the date hereof or at
anytime thereafter. The Company agrees to satisfy
all of its liabilities in an expeditious manner.
3. PURCHASE PRICE. The purchase price ("Purchase Price") to be
paid shall be as follows:
a. A cash payment in the amount of $100,000.00 will be
made to the Company at the Closing ("Cash Payment).
b. Up to 150,000 shares of the common stock, $0.02 par
value of National ("Shares") will be issued as
follows, subject to reduction or set-off as described
in this Agreement:
(i) 30,000 Shares shall be issued to the Company
on the first anniversary date of the Closing
Date.
(ii) 30,000 Shares shall be issued to the Company
on June 30, 1996, provided, that, the gross
revenues generated (a) by the Representatives
joining National, and (b) by any new
representatives joining National that were
introduced to National by the Company and/or
any individual who is as of the Closing Date
an officer, director, shareholder, employee,
agent and/or Representative of the Company as
of the Closing Date (referred to as a
"Referral Source") shall equal or exceed $3
million dollars during the period commencing
from the Closing Date and ending on the first
anniversary of the Closing Date ("First Year
Gross Revenues").
(iii) 40,000 Shares shall be issued to the Company
on June 30, 1997, provided, that, the gross
revenues generated (a) by the Representatives
joining National and (b) by any new
representatives joining National introduced
to National by a Referral Source shall equal
or exceed $5 million dollars during the
period commencing on the day after the first
anniversary of the Closing Date and ending on
the second anniversary of the Closing Date.
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(iv) National will xxxxx Xxxxxx an option to
purchase 50,000 Shares at a exercise price of
$5.00 per share ("Option"), provided that the
aggregate gross revenues generated (a) by the
Representatives joining National and (b) by
any new representatives joining National
introduced to National by a Referral Source
equal or exceed $13 million within four (4)
years from the Closing Date. The Option will
be issued at the time this condition
precedent is satisfied.
c. Subject to paragraph 8 hereof, it is expressly
understood by the Company that the Shares and Option
will not be registered at the present time.
d. National's payment of the Purchase Price is
contingent on the Company's seventeen (17)
Representatives listed on Schedule 3, attached hereto
and made a part hereof ("Top Representatives"),
agreement to become registered representatives of
National within the thirty (30) day period from the
Closing Date and to remain as registered
representatives of National for at least six (6)
months after joining National. In this connection,
the Company will receive credits ("Credits") to be
applied against the Cash Payment made by National at
the Closing equal to (a) Five Thousand Eight Hundred
Eighty-Two Dollars and 35/100 ($5,832.35) for each
Top Representative that agrees to become a registered
representative of National within the thirty (30) day
period from the Closing and remains a registered
representative of National for at least six (6)
months after joining National, and (b) seven percent
(7%) of the amount by which the First Year Gross
Revenues exceed Three Million Nine Hundred Forty-Two
Thousand Eight Hundred Fifty-Seven Dollars
($3,942,857.00). In the event the aggregate Credits
are less than the Cash Payment made by National at
the Closing ("Credit Shortfall"), the total Shares to
be issued by National to the Company or Stuart will
be reduced accordingly. The Share reduction will
equal that number of Shares when multiplied by $5.00
per share equals the Credit Shortfall. In the event
the aggregate Credits equal or exceed the Cash
Payment, National will not have the right to reduce
the total Shares to be issued hereunder except as
otherwise provided in this Agreement.
e. In the event the First Year Gross Revenues are less
than $3,942,857.00 ("Revenue Shortfall"), National
will receive a refund of the Purchase Price equal to
seven percent (7%) of the amount of the First Year
Gross Revenue Shortfall. Any such refund will be
satisfied by reducing the number of Shares to be
issued hereunder. The Share reduction
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will equal that number of Shares when multiplied by
$5.00 per share equals the refund amount.
4. LEASE FOR EXISTING PREMISES OF THE COMPANY.
a. National hereby agrees from and after the Closing
Date and for a period not to exceed twelve (12)
months from the Closing Date to sublease from the
Company the premises located at 000 Xxxx Xxxxxx,
Xxxxxxx, Xxxxxxxxxxxxx ("Premises") and the
furniture, fixtures and equipment under the terms and
provisions of the Company's existing lease dated May
25, 1993 ("Lease"); provided that National receives
written confirmation within the sixty (60) day period
from the Closing Date that not less than twenty (20)
of the Representatives agree to become registered
representatives of National. The aggregate gross
rent shall not exceed $276,000 ($23,000 per month).
The sublease shall be subject to the terms and
conditions of the sublease agreement attached hereto
asExhibit "A".
b. It is expressly understood that if National elects to
close the office at the Premises following the
Closing, that Stuart shall use his best efforts to
list for immediate sale the real estate where the
Premises are located, at a price reasonably related
to the fair market value of such real estate and/or
sublet, in whole or in part, the Premises, and
National shall be entitled to a credit against the
foregoing obligation. In that regard, Stuart shall
immediately inform and transmit to National any and
all bona fide offers to sell the real estate and/or
sublet the Premises. In that regard, it is expressly
understood by and between the parties that National
shall be entitled to a credit for the "net effective
rent" of any sublease calculated over the term from
the commencement date of such sublease if it occurs
during the period within one (1) year following the
Closing taking into account any amortization of any
free or reduced rent during the initial month or
months of such sublease.
5. THE CLOSING. The closing of the transactions contemplated
hereby (the "Closing") shall occur as soon as practicable, and all parties
shall use their best efforts to achieve the Closing on June 5, 1995, but in no
event shall the Closing be later than June 15, 1995, unless the parties hereto
mutually agree to an extension of such date. The date on which the Closing
occurs is referred to herein as the "Closing Date".
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6. DELIVERIES AT CLOSING.
6.1 At the Closing, National shall deliver to the
Company:
a. the Cash Payment, and
b. an executed Sublease Agreement.
6.2 At the Closing, the Company shall deliver to
National:
a. evidence that the Customer Accounts are being
transferred to National free and clear of all unsecured debit
balances;
b. an assignment or termination of those
registered representative/agent agreements of Representatives,
as National may decide in its sole discretion;
c. certified copies of the Company's Articles of
Incorporation and By-Laws, together with any amendments
thereto, certified board and shareholder resolutions
authorizing the Agreement and the transactions contemplated
herein, and current Certificates of Good Standing for the
Company from each jurisdiction in which the Company is
licensed or qualified to transact business; and
d. termination of the Company's clearing
agreement with BSC.
7. CONDUCT OF BUSINESS. From and after the date hereof and until
the Closing Date, the Company shall use its best efforts to preserve and
maintain its assets and shall conduct its business only in the normal and
ordinary course. The Company shall not, among other things, without the
consent of National, do any of the following:
a. enter into any transactions outside the ordinary
course of business;
b. enter into, assume or become bound or obligated by
any agreement, contract or commitment or extend or
modify the terms of any presently existing agreement
which (i) involves the payment of greater than
$25,000 per annum or which extends for more than one
year, (ii) increases the compensation or benefits of
any employee of the Company except in the ordinary
course of business and consistent with past practice
but in no event shall the compensation of Xxxxxx
Xxxxxx, Xxxx Xxxxxx, Xxxx XxXxxxxx or Xxxx Sales be
increased in any manner whatsoever, (iii) involves
any payment or obligation to any affiliate of
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the Company, or (iv) involves the sale of any
material assets of the Company;
c. establish any new or modify any existing employee
benefit or compensation plan; and
d. declare or pay any dividend or make any distribution
of assets to its shareholders or pay any bonuses or
make any other extraordinary payments to its
officers, directors or employees.
8. REGISTRATION OF SHARES OF COMMON STOCK. National will use its
best efforts to register the Shares or Option, as the case may be, owned by the
Company and/or Stuart under the Securities Act of 1933, as amended, and any
applicable state securities laws within twelve months after the date of
issuance. It is further intended that the costs of these efforts will be borne
by National.
9. CONFIDENTIALITY AND PUBLIC ANNOUNCEMENTS. Except as required
by applicable law, no party hereto shall disclose or permit their respective
officers, representatives, agents or employees to discuss the existence or
terms of this Agreement to any third party without the prior written consent of
the other parties hereto, which consent will not be unreasonably withheld. The
parties hereto will mutually agree in advance on the form, timing and contents
of announcement and disclosures regarding the proposed transaction.
10. REPRESENTATIONS, WARRANTIES AND COVENANTS OF STUART AND THE
COMPANY. Stuart and the Company, jointly and severally, represent, warrant and
covenant to National as follows:
10.1 The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the State
of Massachusetts, has the power and authority to own and operate its
properties and to conduct its business, all as such properties are now
owned and operated and such business is conducted, and is qualified to
do business as a foreign corporation in any and all states where
non-qualification would have a materially adverse affect on the
Company. Neither Stuart nor the Company has any investment or
ownership whatsoever in any other corporation, association,
partnership, subsidiary, joint venture or other entity which is in a
related or similar business to that of the Company. The Company owns
no subsidiaries.
10.2 The execution, delivery and performance of this
Agreement by the Company has been duly authorized by all necessary
board and shareholder action on the part of the Company. This
Agreement has been duly executed and delivered by
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the Company, and constitutes a legal, valid and binding obligation of
the Company enforceable in accordance with its terms. No stockholder
or director of the Company dissented with respect to the vote
authorizing and approving this Agreement and the transactions
contemplated hereby.
10.3 At least three (3) days before the Closing, the
Company will furnish National with true and complete copies of, or
make available to its counsel for inspection, (a) the Company's
Articles of Incorporation and By-laws, together with any and all
amendments thereto, (b) all minutes of meetings and records of actions
of the directors and shareholders of the Company, (c) all records of
issuance and transfers of the capital stock of the Company, and (d)
copies of all Customer Account information and of all signed
registered representative/agent agreements with the Representatives.
Further, attached hereto, asSchedule 1 and Schedule 2, is a complete
and current list showing all Customer Accounts, and the names of each
Representative, respectively. Except as set forth on Schedule 2,
Stuart and the Company represent and warrant that each of said
Representatives may be terminated at any time upon immediate notice,
and in the event of such termination no severance pay or other cost or
expense relating to such termination shall in any way become due and
owing.
10.4 Since January 1, 1990, the Company has filed all
required forms, reports, statements and documents with the Securities
and Exchange Commission ("SEC"), National Association of Securities
Dealers ("NASD") and the Boston Stock Exchange ("BSE"), all of which
have complied in all material respects with all applicable
requirements of the Securities Act of 1933 (the "Securities Act"), the
Exchange Act of 1934 (the "Exchange Act") and any other applicable
regulations and rules (referred to herein as the "Reports"). As of
their respective dates, the Reports did not contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
The financial statements (including any related notes) included in the
Reports are true, complete and correct and were prepared in accordance
with generally accepted accounting principles applied on a consistent
basis (except as otherwise stated in such financial statements or, in
the case of audited statements, the related report of independent
certified public accountants for the Company), and present fairly the
financial position, results of operations and changes in financial
position of the Company as of the dates and for the periods indicated,
subject, in the case of unaudited interim financial statements, to
normal year end audit adjustments, none of which either singly or in
the aggregate are material or would have a material adverse effect on
the Company.
10.5 Since January 1, 1990, the Company has not suffered
any material adverse change or conducted its business or operations
other than in the ordinary and usual course of business and consistent
with past practice.
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10.6 Except for applicable requirements of the NASD, the
Exchange Act and other requirements of federal and state securities
laws, no filing or registration with, no notice to and no permit,
authorization, consent or approval of any public or governmental body
or authority is known to be necessary for the consummation by the
Company of the transactions contemplated by this Agreement.
10.7 The Company is duly registered as a broker/dealer
with the SEC under the Exchange Act and as a broker or dealer under
the securities laws of each state in the United States, the District
of Columbia and Puerto Rico. The Company is a member firm in good
standing of the NASD and the BSE.
10.8 Since January 1, 1990, the Company has conducted its
business in compliance in all material respects with all laws and
governmental regulations and with all applicable regulations and rules
of the NASD and the BSE, and no claims or notices of noncompliance
have been received and no non-routine inquiries or investigations have
been conducted.
10.9 The Company conducts its trading activities in
substantial compliance with applicable statutes, rules and regulations
including the Securities Act, the Exchange Act, the NASD rules and
regulations, the BSE rules and regulations, or any other applicable
statute, rule, regulation, or by-laws of any governmental entity or
regulatory body, and in the usual and ordinary course of business of
the Company in accordance with past practices and general industry
standards.
10.10 The Company does not have on file with the SEC, NASD,
or any other regulatory body any notice of capital inadequacy under
Rule 17(a)(i), Rule 17(a)(5) or any other applicable statute, rule,
regulation or by laws of any governmental entity or regulatory body
except as noted on the Company's audited financial statements.
10.11 Since January 1, 1990, neither the Company nor any
officer or director of the Company nor any other person directly or
indirectly affiliated with the Company, including Representatives, is
disqualified, for any period of time, from acting as, or from being
associated or affiliated with, a member of any securities exchange or
securities clearing organization, a registered broker/dealer under the
Exchange Act or a member of a national securities association.
10.12 The Company's FOCUS II Report Form for the three
months ended March 31, 1995, which has been delivered to National, is
true and correct in all material respects.
10.13 The Company has heretofore furnished the Purchaser
with an audited balance sheet for the Company as of December 31, 1994,
the income statement for the twelve-month period then ended, the
unaudited income statements of the Company for the periods ended
January 31, 1995, February 28, 1995, and March 31,
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1995, and the unaudited balance sheet of the Company as of March 31,
1995 (together the "Financial Statements"). The Company has good and
marketable title to all property and assets reflected as the Company
assets on the Financial Statements, free and clear of all rights of
others, except liens and liabilities reflected on the Financial
Statements, or otherwise disclosed herein. The Company has no
liabilities, contingent or otherwise, including, without limitation,
liabilities for taxes due or to become due, accrued vacation pay and
employment retirement plans and contracts, except as (a) reflected as
the Company liabilities on the Financial Statements and not heretofore
discharged, (b) incurred in the normal course of the Company's
business since March 31, 1995, none of which is materially adverse.
The Financial Statements are true and correct, having been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis, and fairly and accurately present the financial
position of the Company as of the points in time referred to in the
Financial Statements, and the results of its operations for the
periods then ended.
10.14 There is no litigation, arbitration proceeding, or
governmental, regulatory or administrative proceeding, order, decree,
investigation, review, claim or complaint pending, outstanding, or, to
the best knowledge of Stuart and the Company, threatened against or
with respect to Stuart or the Company, or their respective business,
operations or affairs, or their respective rights, properties, assets
or liabilities; and, to the best knowledge of Stuart and the Company,
there is no basis for any such litigation, proceeding, order, decree,
investigation, review, claim or complaint except as noted on Schedule
4, attached hereto and made a part hereof.
10.15 The Company has heretofore furnished the Purchaser
with a true and complete schedule (a copy of which is attached hereto
as Schedule 5) listing any and all agreements, contracts, leases,
commitments, guarantees, arrangements and plans to which the Company
is a party or is subject or bound and is existing, which individually
involve payments to or by the Company in excess of two thousand
dollars ($2,000.00) in any twelve (12) month period including those
with the Company's Representatives. The Company is not in breach of,
nor in default under, any of the existing agreements, contracts,
leases, commitments and arrangements listed on Schedule 5, and, to the
best knowledge of Stuart and the Company, no other party to such
existing agreements, contracts, leases, commitments and arrangements
is in breach thereof or in default thereunder; and all existing
agreements, contracts, leases and arrangements listed on Schedule 5
are valid and subsisting and in full force and effect in accordance
with their terms. The Company will furnish to National prior to the
Closing, a copy of each of such documents (or a description thereof if
the arrangement or agreement is oral).
10.16 Neither the execution and delivery of this Agreement,
nor the consummation of any of the transactions contemplated hereby,
will result in any breach of, or change or modification in, or require
any consent, waiver, authorization
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or approval under, or constitute a default under, any agreement or
result in the creation or imposition of any lien, pledge, mortgage,
security interest, claim, charge, encumbrance, assessment or other
adverse interest upon any of the rights, properties or assets, of
Stuart or the Company.
10.17 The Company is not in default in the payment of the
principal (or premium, if any) of, or interest on, any note,
debenture, bond or other indebtedness, nor is in default under, or in
breach or violation of, its Articles of Incorporation or By-laws or,
to the extent that it may have a materially adverse effect on its
financial condition, operations, properties or assets, any contract,
agreement, commitment, guarantee, arrangement or plan to which it is a
party or by which it may be subject or bound; and the business and
affairs of the Company is not presently being, and has not heretofore
been, carried on or conducted in violation of any law, ordinance,
rule, regulation, order, judgment or decree, the violation of which
might have a material adverse effect on its financial condition,
operations, properties or assets.
10.18 As of the date hereof and to and including the
Closing, the Company is a tenant of the Premises pursuant to the
Lease. The Company is not a party to any lease, sublease, and there
are no contracts, agreements, leases, subleases, options or
commitments, oral or written, affecting the Lease. The Company has
been in peaceable possession of the Premises covered by the Lease.
The Company has delivered to National accurate, correct and complete
copies of the Lease, real estate tax assessment, existing insurance
policies, title reports, surveys, physical inspections, environmental
audits and similar reports in the Company's possession for the
Premises. At or prior to the Closing, the Company shall deliver to
National any consents or approvals of any parties required in
connection with this transaction with respect to the sublease of the
Premises. As of the Closing the heating, ventilating, air
conditioning, mechanical, electrical, plumbing, septic systems and all
other systems and fixtures located on or which are a part of the
Premises were each in good operating condition and repair.
10.19 The Company conducts it business in accordance with
any and all patents, trademarks, trade names or copyrights of the
Company. No operation or activity of the Company has resulted or, if
conducted in accordance with the past practices of the Company, will
result, in any suit, alleging the Company has infringed any patent,
trademark, trade name or copyright of any other person or entity.
10.20 The Company maintains insurance with responsible
carriers on its equipment, properties and other assets, and upon its
business and operations, against loss or damage, risks, hazards and
liabilities of the kinds customarily insured against by corporations
engaged in the same or similar businesses in adequate amounts. The
Company maintains in effect all insurance required to be carried by it
by law or by any contract to which it is a party.
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10.21 The Company has duly filed and submitted any and all
tax returns and reports required to be filed or submitted, and has
paid in full any and all taxes, assessments, fees, penalties and
charges upon it, or in respect of its properties, assets, income or
franchises, which are due and payable. No controversy is pending or,
threatened in respect of additional taxes, assessments, fees,
penalties or charges upon the Company in respect of any of their
respective properties, assets, income or franchises. The Company has
not been audited with respect to its federal income tax returns or
with respect to its State or municipal income tax returns.
10.22 Without in any way limiting the warranties,
representations, covenants and agreements made by Stuart and the
Company in this Agreement, no warranty, representation, covenant or
agreement made by Stuart or the Company in this Agreement, no
financial statement, financial data or other information contained in
any certificate, document or instrument furnished, or to be furnished
to National pursuant to this Agreement or in connection with any of
the transactions contemplated hereby, contains or will contain any
untrue statement of a material fact or omits or will omit to state any
material fact necessary in order to make the statements included
herein or therein not misleading.
10.23
a. The Company has no liability which would have
a material adverse effect on the business or assets of the
Company (contingent or otherwise and whether as a result of
the actions of the Company or the actions of others) under,
and is presently in compliance with, all federal, state and
local environmental laws, regulations, ordinances, and other
requirements relating to the storage, spilling, release,
discharge, management, control, and reporting of pollutants,
contaminants, hazardous wastes, hazardous materials, hazardous
substances, oil, petroleum, products, and other materials
which may pose a risk to human health or the environment.
b. Neither the Company nor any other person for
whose conduct the Company is or may be held responsible, has
received any notice related to or connected with the operation
of the business of the Company or the Company's assets:
(i) of a violation of any federal,
state, or local environmental law, regulation,
ordinance, or other requirement which has not been
cured or which had a material adverse effect on the
Company's business; or
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(ii) of any suit, action, claim,
liability (contingent or otherwise), or legal,
administrative, or other proceeding concerning
environmental conditions or matters which has not
been cured or which had a material adverse effect on
the Company's business.
11. REPRESENTATIONS, WARRANTIES AND COVENANTS OF NATIONAL.
National represents, warrants and covenants to the Company as follows:
11.1 National is a corporation duly organized, validly
existing, and in good standing under the laws of the State of
Washington and has full corporate power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby.
11.2 The execution and delivery of this Agreement and the
performance by National of National's obligations hereunder has been
duly authorized by National's Board of Directors. This Agreement
constitutes the legal, valid and binding obligations of National
enforceable against National in accordance with its terms (subject, as
to the enforcement of remedies to bankruptcy, reorganization,
insolvency, moratorium and other similar laws relating to or affecting
the enforcement of creditors' rights generally and subject to the
availability of equitable remedies). Neither the execution and
delivery of this Agreement nor the performance by National of
National's obligations hereunder will result in any violation of its
Articles of Incorporation and do not constitute a default under or a
violation of or give rise to a power to cancel any material
commitment, agreement, order, award, judgment, decree or regulation or
any other instrument to which National is a party or by which National
or its property is bound or is subject.
12. CLOSING CONDITIONS FOR THE BENEFIT OF NATIONAL AND THE
COMPANY. National's and the Company's obligations to consummate the
transactions contemplated by this Agreement are subject to the satisfaction on
or prior to the Closing, of the following conditions:
12.1 The satisfaction of any applicable federal, state or
National Association of Securities Dealers ("NASD") filing or
licensing requirements and the receipt of any applicable approvals
which are required in connection with the proposed transactions.
13. CLOSING CONDITIONS FOR THE BENEFIT OF NATIONAL. National's
obligations to consummate the transactions contemplated by this Agreement are
subject to the satisfaction, on or prior to the Closing, of the following
conditions (compliance with any of which National may waive):
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13.1 The representations and warranties of Stuart, and the
Company contained herein or otherwise made in writing by or on behalf
of Stuart, or the Company pursuant hereto shall be true when made and
on and as of the Closing with the same force and effect as though made
on and as of the Closing; and as of the Closing, Stuart, and the
Company shall have performed and complied with all covenants,
agreements and conditions required to be performed and complied with
by Stuart, and the Company prior to or on the Closing.
13.2 The execution of employment or independent sales
representative agreements between National and each of Xxxx Xxxxxx,
Xxxx XxXxxxxx and Xxxx Sales upon terms mutually agreed to between
such parties.
13.3 The execution of the Sublease Agreement attached
hereto as Exhibit "A."
13.4 The assignment of all Customer Accounts to National.
13.5 The termination of the Company's clearing agreement
with BSC.
13.6 The assignment to National of the Company's rights,
title and interest to the registered representative/agent agreements
with the Representatives.
14. CLOSING CONDITIONS FOR THE BENEFIT OF THE COMPANY. The
obligations of the Company to consummate the transactions contemplated by this
Agreement are subject to the satisfaction, on or prior to the Closing, of the
following conditions (compliance with any of which may be waived):
14.1 The representations and warranties of National
contained herein or otherwise made in writing by or on behalf of
National pursuant hereto shall be true when made and on and as of the
Closing with the same force and effect as though made on and as of the
Closing; and as of the Closing, the Purchaser shall have performed and
complied with all the covenants, agreements and conditions required to
be performed and complied with by it prior to or on the Closing.
15. CONTINUING OBLIGATIONS. Following the Closing, the Company
and Stuart agree to provide National, or its representatives, with access
during normal business hours to the books and records of the Company, and to
carry out their duties hereunder as required. The Company agrees not to
destroy any of the books and records of the Company without giving National
reasonable prior notice of its intent to do so and an opportunity to take
possession, or make abstracts, of such books and records.
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16. RESTRICTIVE COVENANTS.
16.1 Non-Competition/Non-Solicitation. Stuart and the
Company, jointly and severally, covenant and agree that for a period
of five (5) years after the Closing Date (the "Non-Competition
Period"), Stuart or the Company, individually or collectively, will
not own, manage, or operate any registered broker/dealer as a
proprietor, partner, shareholder, director or officer anywhere within
the United States of America, including its territories and
possessions. During the Non-Competition Period, Stuart or the
Company, individually or collectively, shall not directly or
indirectly recruit, solicit or otherwise induce any officer, employee
or broker/independent sales representative of National, or any
Representative, or any representative that was referred to National by
any Referral Source, to discontinue such relationship with National.
16.2 Confidentiality of Trade Secrets and Other Materials.
Other than in the performance of Stuart's or the Company's duties
hereunder, Stuart and the Company, jointly and severally, agree, to
hold in confidence and not to disclose, at any time, to any person, or
entity, or use or otherwise exploit for his or its own benefit or the
benefit of any person or entity, any confidential or proprietary
information of National, including, without limitation, Customer
Accounts, customer and vendor lists, brokers/independent sales
representative lists, financial statements and information, trade
secrets or marketing arrangements and plans, any information
concerning the business affairs, the Representatives list, or similar
information of National. Any technique, method, process, technology
or customer compilation of list used by National shall be considered a
"trade secret" for purposes of this Agreement.
16.3 Non-Circumvention. Stuart and the Company, jointly
and severally, agree, not in any way to circumvent or interfere with
the Customer Accounts, Representatives or any representative that
joins National that was referred to National by a Referral Source, or
with any transactions that National may have with any person or
entity.
16.4 Specific Performance. Stuart and the Company,
jointly and severally, agree, that any violation of this section of
the Agreement would be highly injurious to National and would cause
irreparable harm to National. By reason of the foregoing, Stuart and
the Company, jointly and severally, consent and agree that if Stuart
or the Company, jointly or severally, violate any provision of this
Section, National shall be entitled, in addition to any rights or
remedies that it may have, including monetary damages, to apply to any
court of competent jurisdiction for specific performance or injunctive
or other relief in order to enforce or prevent any continuing
violation of the provisions of this section.
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17. STUART'S AND THE COMPANY'S INDEMNIFICATIONS. The Company and
Stuart covenant and agree with National that they, jointly and severally, shall
reimburse and indemnify and hold National harmless from, against and in respect
of the following:
a. Any and all damage, loss, liability, claim or
deficiency incurred by National resulting from, or
which exists or arises due to, any untruth,
inaccuracy, breach or omission of, from or in, the
representations and warranties made by the Company or
Stuart herein or any nonfulfillment of any covenant
or agreement of the Company or Stuart under this
Agreement, or from any untruth, material inaccuracy,
breach or omission of, from or in, any representation
or warranty, or any nonfulfillment of any covenant or
agreement made by the Company or Stuart in this
Agreement, the Schedules or any other written
statement, list, certificate or other instrument
furnished to National by or on behalf of the Company
or Stuart pursuant to this Agreement;
b. Any liability or obligation of or claim against
National of any nature, whether accrued, absolute,
contingent or otherwise, of the Company's and (i)
arising or to be performed on or prior to the date
hereof, or (ii) arising or to be performed after the
date hereof (whether known or unknown to the Company,
Stuart or National);
c. Any taxes of the Company's of any kind whatsoever, or
expenses, interest or penalties relating thereto and
are imposed under any law, ordinance, statute, rule
or regulation;
d. Any attempt (whether or not successful) by any person
to cause or require National to pay or discharge any
debt, obligation, liability or commitment of either
of the Company or Stuart not assumed by National
pursuant to this Agreement;
e. Any claim, damage, liability and expense incurred by
National, arising from or in connection with or
related to any of the Company's employee benefit
plans (including, but not limited to, any termination
or discontinuance thereof);
f. Any and all damage, loss, liability, claim or
deficiency incurred by National arising from a
Representative's registered representative/agent
agreement or a Customer Account prior to the
assignment of such agreement or account to National;
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g. Any liability or obligation of or claim against
National relating to the termination by National
and/or the Company of any Representative's registered
representative/agent agreement assigned to National;
and
h. Any and all actions, suits, claims, proceedings,
investigations, audits, demands, assessments, fines,
judgments, costs and other expenses (including,
without limitation, reasonable audit and legal fees)
incurred by National resulting from the circumstances
described in paragraphs a. through g. above. In
addition, National shall have a right of set-off
against the Purchase Price to be delivered hereunder.
18. NATIONAL'S INDEMNIFICATION. National shall indemnify and hold
harmless the Company, its successors and assigns from and against any and all
claims, liabilities, obligations, damages, losses, costs and expenses
whatsoever (including reasonable attorneys' fees and disbursements) arising out
of or resulting from the non-performance of duties and obligations for which
National is responsible under this Agreement and any violation by National of
its representations, warranties, covenants and agreements contained in this
Agreement or any instrument delivered pursuant hereto.
19. METHOD OF ASSERTING CLAIMS. The party seeking indemnity
hereunder ("Indemnitee") will give prompt written notice to the party providing
indemnity ("Indemnitor") of any claim which it discovers or of which it
receives notices after the date hereof and which might give rise to a claim by
it against Indemnitor under this Agreement, stating the nature, basis and (to
the extent known) amount thereof. In case of any claim or suit by a third
party or by any governmental body, or any legal, administrative or arbitration
proceeding with respect to which Indemnitor may have liability under the
indemnity agreements contained in this Agreement, Indemnitor shall be entitled
to participate therein, and, to the extent desired by it or them, to assume the
defense thereof, and after notice from Indemnitor to Indemnitee of the election
so to assume the defense thereof, Indemnitor will not be liable to Indemnitee
for any legal or other expenses subsequently incurred by Indemnitee in
connection with the defense thereof, other than reasonable costs of
investigation, unless Indemnitor does not actually assume the defense thereof
following notice of such election. Indemnitee and Indemnitor will render to
each other such assistance as may reasonably be required of each other in order
to ensure proper and adequate defense of any such suit, claim or proceedings.
Indemnitee will not make any settlement of any claim which might give rise to
liability of an Indemnitor under the indemnity agreements contained in this
Agreement without the written consent of Indemnitor, which consent shall not be
unreasonably withheld, unless Indemnitor in the good faith exercise of its
discretion, deems itself insecure with respect to Indemnitor's ability to pay
the claim. If Indemnitor shall desire and be able to effect a bona fide
compromise or settlement of any such suit, claim or proceedings and Indemnitee
shall unreasonably refuse to consent to such compromise or settlement, then the
Indemnitor's liability with respect to such suit, claim or proceeding shall be
limited to the amount so offered in
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compromise or settlement together with all legal and other expenses which may
have been incurred prior to the date on which Indemnitee has refused to
consent to such compromise or settlement.
20. TERMINATION PRIOR TO CLOSING. This Agreement and the
transactions contemplated hereby may be terminated at any time prior to the
Closing:
a. by mutual consent of the parties hereto;
b. by the Company, if there has been a material
misrepresentation or breach of warranty by National under this
Agreement which shall not have been waived, or if the conditions
specified in Sections 12 or 14 hereof have not been satisfied; or
c. by National, if there has been a material
misrepresentation or breach of warranty by Stuart or the Company under
this Agreement which shall not have been waived, or if the conditions
specified in Sections 12 or 13 hereof have not been satisfied.
21. BROKERS.
21.1 The Company (i) represents and warrants that it has
retained no finder or broker in connection with the transactions
contemplated by this Agreement and (ii) hereby agrees to indemnify and
hold harmless National from any liability for any commission or
compensation in the nature of a finder's fee to any broker or other
person or firm (and the costs and expenses of defending against such
liability or asserted liability) for which the Company, or any of its
agents, are responsible.
21.2 Stuart (i) represents and warrants that he has
retained no finder or broker in connection with the transactions
contemplated by this Agreement and (ii) hereby agrees to indemnify and
hold harmless National from any liability for any commission or
compensation in the nature of a finder's fee to any broker or other
person or firm (and the costs and expenses of defending against such
liability or asserted liability) for which Stuart, or any of his
agents, are responsible.
21.3 National (i) represents and warrants that it has
retained no finder or broker in connection with the transactions
contemplated by this Agreement and (ii) hereby agrees to indemnify and
hold harmless the Company from any liability for any commission or
compensation in the nature of a finder's fee to any broker or other
person or firm (and the costs and expenses of defending against such
liability or asserted liability) for which National, or any of its
agents, are responsible.
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22. SURVIVAL. All statements contained in any certificate,
instrument, schedule or document delivered by or on behalf of any of the
parties at the Closing shall be deemed representations and warranties by such
party or parties. Such representations and warranties and all representations,
warranties and covenants made by the parties in this Agreement shall survive,
except to the extent waived in writing, the Closing and the consummation of the
transactions contemplated by this Agreement.
23. ENTIRE AGREEMENT. This Agreement, including all Schedules and
Exhibits attached hereto constitutes the entire agreement between the parties,
and supersedes any prior and/or written agreements between the parties. All
Schedules and Exhibits attached hereto are hereby incorporated into and made a
part of this Agreement. No amendment, modification, waiver, termination or
cancellation of this Agreement shall be binding unless in writing signed by the
party against whom enforcement of any such amendment, modification, waiver,
termination or cancellation is sought.
24. NOTICES. Any notice or other communication required,
permitted or desirable hereunder, shall be deemed sufficiently given if
personally delivered, or if sent by facsimile transmission or by certified or
registered mail, postage prepaid, return receipt requested, addressed as
follows:
To Stuart:
Xxxxxx Xxxxxx
X.X. Xxxxxx & Company, Inc.
--------------------------------
--------------------------------
To the Company: Copy to:
X.X. Xxxxxx & Company, Inc.
-----------------------
000 Xxxx Xxxxxx
-----------------------
Xxxxxxx, Xxxxxxxxxxxxx 00000
-----------------------
Attn: Xxxxxx Xxxxxx
-----------------------
To Purchaser: Copy to:
National Securities Corporation Xxxxxx X. Xxxx, Esq.
0000 Xxxxxx Xxxxxx Xxxxxx, Xxxx & Capitel, Ltd.
Xxxxx 0000 00 Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxxxx 00000 Xxxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx
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Any party may change its address for purposes of this paragraph by giving the
other party written notice of the new address in the manner set forth above.
Any notice given in accordance with the above shall be deemed to have been
given upon personal delivery if so delivered, upon receipt of confirmation if
sent via facsimile transmission or on the third day after mailing if mailed,
but if given otherwise than as set forth above, such notice shall be deemed to
have been given when actually received.
25. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of the successors and assigns of the parties hereto,
and shall not be assigned by any party without the written consent of the other
party to this Agreement.
26. CONSTRUCTION. This Agreement shall be construed and enforced
in accordance with the laws of the State of Washington, without respect to its
conflicts of laws provisions.
27. EXPENSES. Whether or not the transactions contemplated herein
shall be consummated, the parties shall pay their own expenses incident to
preparing for, entering into and carrying into effect this Agreement and for
the consummation of said transactions.
28. SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in an
acceptable manner to the end that transactions contemplated hereby are
fulfilled to the extent possible.
29. COUNTERPARTS. This Agreement may be executed in one (1) or
more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which shall constitute one and the same agreement. This Agreement may
be executed and delivered via electronic facsimile transmission with the same
force and effect as if it were executed and delivered by the parties
simultaneously in the presence of one another.
30. WAIVER. Waiver of any term or condition of this Agreement by
any party shall only be effective if in writing and shall not be construed as a
waiver of any subsequent breach or failure of the same term or condition, or a
waiver of any other term or condition of this Agreement.
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31. AMBIGUITIES. Each party to this Agreement waives any common
law or statutory presumption against the drafter of a document. The parties
agree that they have each participated in the drafting of this Agreement. Each
party acknowledges that they have had the opportunity to seek independent
advice and counsel before executing this Agreement.
THIS AGREEMENT CONSISTS OF TWENTY-TWO (22) PAGES (INCLUDING THE SIGNATURE
PAGE), AND THE EXHIBITS AND SCHEDULES ATTACHED HERETO.
***SIGNATURE PAGE FOLLOWS***
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first above written.
PURCHASER:
NATIONAL SECURITIES CORPORATION STUART:
By:
------------------------------ -------------------------------------
Xxxxxx Xxxxxx, individually
Its:
-----------------------------
COMPANY:
X.X. XXXXXX & COMPANY, INC.
By:
------------------------------
Its:
-----------------------------
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EXHIBIT 11
NATIONAL SECURITIES CORPORATION AND SUBSIDIARY
COMPUTATION OF EARNINGS PER SHARE
PRIMARY
SEPTEMBER 29, September 30, September 24,
1995 1994 1993
------------- ------------- -------------
Net income for primary earnings
per share $257,000 $510,000 $680,000
======== ======== ========
Weighted average number of
common shares outstanding
during the year 602,674 597,493 644,348
Add common equivalent shares
upon exercise of stock options 33,432 26,923 10,306
-------- -------- --------
Weighted average number of
shares used in calculation
of primary earnings per share 636,106 624,416 654,654
======== ======== ========
Primary earnings per share $ .40 $ .82 $ 1.04
======== ======== ========
FULLY DILUTED
Weighted average number of
shares used in calculating
primary earnings per share 636,106 624,416 654,654
Add
Additional shares issuable
upon exercise of stock options * * 33,780
-------- -------- --------
Weighted average number of
shares used in calculation
of fully diluted earnings per share 636,106 624,416 688,434
======== ======== ========
Fully diluted earnings per share $ .40 $ .82 $ .99
======== ======== ========
*No effect given to common stock equivalents, as their effect would increase the
income per share.
