SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 23, 1996
FRONTEER FINANCIAL HOLDINGS, LTD.
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(Exact name of registrant as specified in its charter)
Colorado 0-17637 45-0411501
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(State or other jurisdiction (Commission File No.) (I.R.S. Employer
of incorporation) Identification No.)
1700 Lincoln Street, 32nd Floor, Denver, Colorado 80203
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: (303) 860-1700
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Item 2. ACQUISITION OR DISPOSITION OF ASSETS.
On July 23, 1996 (the "Closing Date"), RAF Financial Corporation ("RAF"), a
wholly owned subsidiary of Fronteer Financial Holdings, Ltd. ("Fronteer"),
closed the transfer of its securities brokerage clearing operation ("Clearing
Operation") to a new firm, MultiSource Services, Inc. ("MSI"). The purchase
price was $3.0 million plus the net book value of the financial assets of the
Clearing Operation as of the Closing Date which totalled approximately $0.5
million. MSI paid $1.5 million of the purchase price in the form of a forgivable
loan which will be forgiven in whole or in part based on MSI's revenues during
the 28 months following the Closing Date. The sale price was the result of arms
length negotiations between unrelated parties. Fronteer owns 20% of the
outstanding common stock of MSI and Oppenheimer Funds, Inc. owns the remaining
80%. RAF has become a fully disclosed clearing correspondent of MSI.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial statements of business acquired.
Not applicable
(b) Pro forma financial information.
As of the filing date of this Current Report on Form 8-K, it is
impracticable for the Registrant to provide the pro forma financial
information required by this Item 7(b). In accordance with Item 7(b)
of Form 8-K, such pro forma financial information shall be filed by
amendment to this Form 8-K no later than 60 days after August 7, 1996.
(c) Exhibits.
Exhibit 10.l Agreement for Sale and Purchase of Certain of the
Business and Assets of RAF Financial Corporation dated
January 29, 1996 by and among Fronteer Directory Company,
Inc., RAF Financial Corporation and MultiSource Services,
Inc.
Exhibit 10.2 Stock Subscription Agreement dated January 29, 1996 by
and among Fronteer Directory Company, Inc., Oppenheimer
Funds, Inc. and MultiSource Services, Inc.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: August 7, 1996.
FRONTEER FINANCIAL HOLDINGS, LTD.
By: /s/ R. A. Fitzner, Jr.
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R. A. Fitzner, Jr.
Chairman of the Board
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EXHIBIT INDEX
Exhibit Description Page No.
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10.1 Agreement for Sale and Purchase of Certain of
the Business and Assets of RAF Financial
Corporation dated January 29, 1996 by and
among Fronteer Directory Company, Inc., RAF
Financial Corporation and MultiSource
Services, Inc.
10.2 Stock Subscription Agreement dated January
29, 1996 by and among Fronteer Directory
Company, Inc., Oppenheimer Funds, Inc. and
MultiSource Services, Inc.
AGREEMENT FOR SALE AND PURCHASE
OF CERTAIN OF THE BUSINESS AND ASSETS
OF
RAF FINANCIAL CORPORATION
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TABLE OF CONTENTS
SECTION HEADING PAGE
ARTICLE 1 PURCHASE AND SALE.................................................2
Section 1.1 Properties and Assets to be Sold and Purchased.................2
Section 1.2 Excluded Assets................................................3
Section 1.3 Assumed Obligations............................................3
Section 1.4 Excluded Obligations...........................................3
Section 1.5 Closing Date and Time and Place of Closing.....................4
Section 1.6 Purchase Price.................................................4
Section 1.7 Purchase Price Allocation......................................4
Section 1.8 Taxes and Adjustment of Financial Accounts and Financial
Liabilities....................................................5
Section 1.9 Bulk Transfer Laws.............................................5
Section 1.10 Fronteer Note..................................................5
Section 1.11 Master Software Development Agreement and Master
License Agreement..............................................5
Section 1.12 Facilities Agreement...........................................5
Section 1.13 Sublease Agreement.............................................6
Section 1.14 Shareholders Agreement.........................................6
Section 1.15 Clearing Agreement.............................................6
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF FRONTEER AND
SELLER............................................................6
Section 2.1 Organizational Status..........................................6
Section 2.2 Authority......................................................6
Section 2.3 Seller's Audited Annual Financial Statements Previously
Delivered......................................................7
Section 2.4 Seller's Interim Financial Statements Previously Delivered.....7
Section 2.5 Fronteer Interim Financial Statements Previously Delivered.....7
Section 2.6 Seller's Financial Statements to be Delivered..................7
Section 2.7 Fronteer Financial Statements to be Delivered..................8
Section 2.8 Reports........................................................8
Section 2.9 Operations.....................................................8
Section 2.10 Liabilities and Obligations of Seller..........................9
Section 2.11 Title..........................................................9
Section 2.12 Condition of Purchased Assets.................................10
Section 2.13 Right to Inspect the Properties and Records...................10
Section 2.14 Insurance.....................................................10
Section 2.15 Litigation and Claims.........................................10
Section 2.16 Employment Obligations........................................10
Section 2.17 Compliance with ERISA.........................................11
Section 2.18 Preservation of Business Relationships........................11
Section 2.19 Material Agreements With Respect to Clearing Business.........11
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Section 2.20 Compliance with Laws..........................................11
Section 2.21 Licenses, Permits and Approvals...............................12
Section 2.22 Ownership of Properties.......................................13
Section 2.23 Intellectual Property.........................................13
Section 2.24 Investment Representation.....................................13
Section 2.25 Accuracy of Schedules.........................................14
Section 2.26 Basis for Representations and Warranties......................14
Section 2.27 Disclosure....................................................14
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF BUYER..........................15
Section 3.1 Corporate Status..............................................15
Section 3.2 Authority of Buyer............................................15
Section 3.3 Capitalization of.............................................15
Section 3.4 Licenses, Permits, Approvals, Etc.............................15
ARTICLE 4 CONDITIONS PRECEDENT TO OBLIGATIONS OF OFI.......................16
Section 4.1 Accuracy of Representations, Warranties and Covenants.........16
Section 4.2 Licenses, Permits, Approvals, Etc.............................16
Section 4.3 Third Party Consents..........................................16
Section 4.4 No Adverse Changes............................................16
Section 4.5 Approval of Legal Matters by Counsel..........................16
Section 4.6 No Adverse Proceedings........................................17
Section 4.7 Receipt of Closing Documents..................................17
Section 4.8 Approval of Schedules and Documents...........................17
ARTICLE 5 CONDITIONS PRECEDENT TO OBLIGATIONS OF FRONTEER
AND SELLER.......................................................17
Section 5.1 Accuracy of Representations, Warranties and Covenant..........17
Section 5.2 Capitalization of Buyer.......................................17
Section 5.3 Approval of Legal Matters by Counsel..........................17
Section 5.4 Receipt of Closing Documents..................................18
ARTICLE 6 CLOSING DOCUMENTS................................................18
Section 6.1 Documents to be Delivered by Seller to Buyer..................18
Section 6.2 Documents to be Delivered by Buyer............................19
ARTICLE 7 FURTHER AGREEMENTS...............................................20
Section 7.1 Commissions and Expenses of Sale..............................20
Section 7.2 Updating of Schedules.........................................21
Section 7.3 Clearing Employees............................................21
Section 7.4 Operation of Clearing Business after Closing..................21
Section 7.5 New Clearing Agreements.......................................21
Section 7.6 Services of Robert A. Fitzner, Jr.............................21
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Section 7.7 Guaranty of Fronteer..........................................21
Section 7.8 Voting Control of Secutron, Frank Horwich Employment..........21
ARTICLE 8 SURVIVAL OF REPRESENTATIONS AND WARRANTIES, INDEMNIFICATION......22
Section 8.1 Survival of Representations and Warranties....................22
Section 8.2 Indemnification by Fronteer and Seller........................22
Section 8.3 Indemnification by Buyer......................................22
ARTICLE 9 TERMINATION, AMENDMENTS AND WAIVER...............................23
Section 9.1 Termination...................................................23
Section 9.2 Effect of Termination.........................................23
Section 9.3 Amendment.....................................................24
Section 9.4 Waiver........................................................24
ARTICLE 10 MISCELLANEOUS PROVISIONS.........................................24
Section 10.1 Notices.......................................................24
Section 10.2 Further Assurance.............................................25
Section 10.3 Execution and Counterparts....................................25
Section 10.4 Headings......................................................25
Section 10.5 Miscellaneous.................................................25
Section 10.6 Publicity.....................................................25
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AGREEMENT FOR SALE AND PURCHASE
OF CERTAIN OF THE BUSINESS AND ASSETS
OF
RAF FINANCIAL CORPORATION
This Agreement is made and entered into as of January __, 1996 by and
among FRONTEER DIRECTORY COMPANY, INC. a Colorado corporation ("Fronteer"), RAF
FINANCIAL CORPORATION, a Colorado corporation ("Seller") which is a wholly-owned
subsidiary of Fronteer, and MULTISOURCE SERVICES, INC., a Colorado corporation
(the "Buyer").
WITNESSETH:
WHEREAS, Seller is engaged in the business of a registered broker-dealer
consisting of providing securities transaction clearing services for itself and
other broker-dealers on a fully disclosed basis (the "Clearing Business"),
providing securities brokerage and investment services, trading fixed income and
equity securities, providing investment banking services to corporate and
municipal clients, managing and participating in underwriting of corporate and
municipal securities, and distributing mutual fund shares (all such business,
including the Clearing Business, hereinafter referred to collectively as the
"Securities Business");
WHEREAS, Fronteer acquired all the capital stock of Seller and certain
other assets from RAFCO, Ltd., a Nevada corporation ("RAFCO"), pursuant to that
certain Plan of Reorganization and Exchange Agreement dated April 26, 1995 (the
"Reorganization Agreement") which was consummated on April 26, 1995;
WHEREAS, Seller and Oppenheimer Funds, Inc. a Colorado corporation ("OFI")
have entered into that certain Stock Subscription Agreement of even date
herewith (the "Subscription Agreement") pursuant to which Seller will acquire
200 shares of the common stock of Buyer upon the consummation of the
transactions hereunder and immediately thereafter, OFI will acquire 800 shares
of the common stock of Buyer.
WHEREAS, Seller desires to sell to Buyer and Buyer desires to purchase from
Seller, the Clearing Business of Seller as a going concern and certain assets of
Seller used in the Clearing Business upon the terms and conditions hereinafter
set forth;
NOW, THEREFORE, in consideration of the premises and the mutual promises
herein set forth, it is hereby agreed as follows:
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ARTICLE 1
PURCHASE AND SALE
Section 1.1. Properties and Assets to be Sold and Purchased. Subject to
the terms and conditions of this Agreement, and upon the basis of the
representations and warranties herein contained, on the Closing Date (as such
term is hereinafter defined) Seller agrees to sell and deliver to Buyer, and
Buyer agrees to purchase from Seller, all of the following properties and assets
of Seller, wheresoever located, and whether or not carried on the books of
Seller, all as the same shall exist at the Closing (as such term is hereinafter
defined) on the Closing Date, (hereinafter said properties and assets are
sometimes collectively called the "Purchased Assets"):
(a) The Clearing Business of Seller as a going concern including the
good will and all records, books, regulatory filings, customer lists,
supplier lists, brochures, office supplies, literature, credit information
and any and all other operating data of Seller with respect thereto;
(b) Such margin loans, clearing house balances and other financial
assets relating to the Clearing Business as identified in Exhibit A
attached hereto and hereby made a part hereof as the same exist on the
Closing Date but only to the extent Seller receives full credit therefore
as provided in Section 1.8 hereof (the "Financial Assets") which Exhibit
sets forth the Financial Accounts and Financial Liabilities, as hereinafter
defined, as of November 24, 1995;
(c) All computer programs, software, software licenses, microfiche,
copyrights, patents, processes, "know-how," trade secrets (including any
common law rights), including all goodwill associated therewith, relating
to or used in connection with the Clearing Business, a list and description
of which are contained on Schedule 1.1(c) attached hereto and hereby made a
part hereof;
(d) All interest in and to the telephone numbers and telex numbers of
Seller used in the Clearing Business and all listings of Seller in
connection with the Clearing Business in all telephone books and
directories, a list and description of which are contained on Schedule
1.1(d) attached hereto and hereby made a part hereof;
(e) All furniture, fixtures, vehicles, equipment, hardware, shelving,
office supplies, folding, stamping and sorting equipment, and all other
items of tangible personal property of Seller used in the Clearing
Business, a list and description of which are contained on Schedule 1.1(e)
attached hereto and hereby made a part hereof;
(f) Those franchises, grants, licenses, permits authorizations
certificates, orders, registrations and approvals of Seller relating to the
Clearing Business listed and described on Schedule 1.1(f) attached hereto
and hereby made a part hereof;
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(g) All claims and rights (and benefits arising therefrom) relating to
or arising out of the Clearing Business in connection with the Purchased
Assets against manufacturers, contractors, sellers or suppliers, including,
without limitation, all warranties and guarantees; and
(h) Those executory contracts of Seller relating to the Clearing
Business listed and described on Schedule 1.1(h) attached hereto and hereby
made a part hereof (the "Executory Contracts");
Section 1.2. Excluded Assets. Seller shall retain and not sell and deliver
to Buyer, and Buyer shall not purchase from Seller, the following properties and
assets of Seller owned and held by Seller on the Closing Date (the "Excluded
Assets"):
(a) All assets and properties of Seller which are not used in
connection with the Clearing Business ; and
(b) The Securities Business of Seller as a going concern, not
including the Clearing Business.
Section 1.3. Assumed Obligations. Buyer shall assume on the Closing Date
only the following described liabilities, obligations, contracts and commitments
of Seller which exist on the Closing Date (the "Assumed Obligations"):
(a) Obligations of continued performance by the Seller arising after
the Closing Date under the Executory Contracts listed on Schedule 1.1(h)
for which the Buyer receives the benefit thereof, except for any such
obligation thereunder arising prior to the Closing; and
(b) Such current financial liabilities to customers or others arising
out of the Clearing Business as identified in Exhibit A attached hereto as
the same exist on the Closing Date but only to the extent Buyer receives
full credit therefore as provided in Section 1.8 hereof (the "Financial
Liabilities")
Section 1.4. Excluded Obligations. Without in any manner affecting the
limitation of the obligations to be assumed by Buyer contained in Section 1.3
hereof, but rather to identify more particularly certain obligations of Seller
which are not to be assumed by Buyer on the Closing (the "Excluded Obligations")
it is agreed that Buyer shall not assume nor be liable for, and Seller expressly
agrees that Seller shall be liable for and, promptly discharge when due all
debts, liabilities and obligations of Seller including without limitation:
(a) All liabilities and obligations for long term and short term debt
and all accounts payable except those constituting Financial Liabilities
specifically included in the Assumed Obligations expressly assumed by Buyer
pursuant to Section 1.3 hereof;
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(b) All liabilities, obligations and claims, now existing or hereafter
at any time arising or asserted (whether known or unknown, contingent or
fixed, liquidated or unliquidated), based on or arising from acts, events,
transactions, occurrences, circumstances, or exposure to conditions,
existing or occurring prior to the Closing Date, including, without
limitation, liabilities, obligations and claims arising in connection with
any negligence or misconduct, whether actual or alleged, of Seller or any
of its directors, officers, employees or agents, prior to the Closing Date
including, without limitation, any liabilities arising out of any matters
described in Schedule 2.15 attached hereto;
(c) All Seller's liabilities and obligations to employees and former
employees of Seller, including without limitation, liabilities and
obligations for wages, bonuses, retirement benefits, health benefits, sick
time, insurance benefits, vacation pay and severance pay; and
(d) All other debts, liabilities, obligations, contracts and
commitments (whether known or unknown, contingent or fixed, liquidated or
unliquidated) of Seller arising out of or related to the ownership of the
Purchased Assets or the Excluded Assets by Seller, the operation of the
Securities Business by Seller, or the transfer of the Purchased Assets to
Buyer under the terms hereof, except for the specific Assumed Obligations
expressly assumed by Buyer pursuant to Section 1.3 hereof.
Section 1.5. Closing Date and Time and Place of Closing. The purchase and
sale provided for herein shall be consummated and closed (the "Closing") at
10:00 A.M., local time, on a business day prior to June 29, 1996 agreed upon by
Seller and Buyer, following the satisfaction of all conditions to Closing
(except those which by their terms can only be satisfied upon Closing) but no
later than the tenth business day following the satisfaction of such conditions,
at the offices of Buyer in Denver, Colorado or at such other time and place as
Seller and Buyer shall agree upon. The time and date designated hereunder for
consummating and closing the purchase and sale, or the most recently agreed upon
date, if any, is herein called the "Closing Date."
Section 1.6. Purchase Price. The Purchase Price to be paid by Buyer for
Purchased Assets (the "Purchase Price") shall be as follows:
(a) At the Closing, Buyer shall pay to Seller by wire transfer Federal
Funds in the amount of Three Million and 00/100 Dollars ($3,000,000) (the
"Closing Cash Payment"); and
(b) As additional consideration, at the Closing Buyer shall issue to
Fronteer two hundred (200) shares of the Common Stock of Buyer (the "Buyer
Stock"), which will represent twenty percent (20%) of the issued and
outstanding shares of Buyer's capital stock after the issuance of eight
hundred (800) shares to OFI pursuant to the Subscription Agreement.
Section 1.7. Purchase Price Allocation. The Purchase Price shall be
specifically allocated among the Purchased Assets and to the Agreement Not to
Compete referred to in Section 6.1(j) hereof in the manner set forth in Exhibit
B attached hereto and hereby made a part hereof. Fronteer, Seller and Buyer
covenant and agree not to take a position on any income tax return, before any
governmental agency charged with the collection of income tax or in any judicial
proceeding that is in any way inconsistent with the allocation of the Purchase
Price pursuant to this Section.
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Section 1.8. Taxes and Adjustment of Financial Accounts and Financial
Liabilities. All sales, transfer and use taxes arising out of, or in any manner
connected with, the sale and transfer of the Purchased Assets hereunder shall be
paid by Seller or Buyer, as the case may be, who is responsible for such payment
under applicable law. On the Closing Date, Buyer and Seller shall adjust the
Financial Assets and the Finance Liabilities as set forth in Exhibit A, attached
hereto and Seller shall make a cash payment to the Buyer of net amount of any
such Financial Liabilities in excess of such Financial Assets, or, as the case
may be, Buyer shall credit to Seller's account with Buyer the net amount of any
excess of such Financial Assets over such Financial Liabilities. The
determination of the amounts of Financial Assets and Financial Liabilities shall
be in accordance with the terms and conditions in Exhibit A attached hereto.
Section 1.9. Bulk Transfer Laws. Seller shall comply with all applicable
laws relating to bulk transfers, and with any advance notice of the sale and
purchase provided for therein required or permitted to be given under any
applicable laws relating to bulk transfers (collectively, the "Bulk Transfer
Acts") unless waived in writing by Buyer.
Section 1.10. Fronteer Note. On the Closing, Fronteer shall execute and
deliver to Buyer a Secured Promissory Note in the principal amount of One
Million Five Hundred Thousand and 00/100 Dollars ($1,500,000) (the "Note")
payable to Buyer in the form attached hereto as Exhibit C-1 and hereby made a
part hereof, secured by a first security interest in certain securities held by
Fronteer, pursuant to a Pledge Agreement from Fronteer in the form attached
hereto as Exhibit C-2 and hereby made a part hereof (the "Pledge Agreement")
representing the obligation of Fronteer to repay a portion of the Purchase Price
to Buyer on the terms stated therein relating to the results of the Clearing
Business after Closing.
Section 1.11. Master Software Development Agreement and Master License
Agreement. On the Closing, Buyer and Fronteer's subsidiary, Secutron Corp.
("Secutron") shall execute and deliver that certain Master Software Development
Agreement in the form attached hereto as Exhibit D-1 and hereby made a part
hereof (the "Software Agreement") together with the guaranty of Fronteer of such
agreement and that certain Master License Agreement in the form attached hereto
as Exhibit D-2 and hereby made a part hereof ("License Agreement") together with
the guaranty of Fronteer of such agreement.
Section 1.12. Facilities Agreement. On the Closing, Buyer and Secutron
shall execute and deliver that certain Facilities Agreement in the form attached
hereto as Exhibit E and hereby made a part hereof (the "Facilities Agreement")
together with the guaranty of Fronteer of such agreement.
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Section 1.13. Sublease Agreement. On the Closing, Fronteer and Buyer shall
execute and deliver that certain Sub-sublease Agreement in the form attached
hereto as Exhibit F and hereby made a part hereof (the "Sublease Agreement").
Section 1.14. Shareholders Agreement. On the Closing, Fronteer and Buyer
shall execute and deliver that certain Shareholders Agreement in the form
attached hereto as Exhibit G and hereby made a part hereof relating to
Fronteer's ownership of the Buyer Stock (the "Shareholders Agreement").
Section 1.15. Clearing Agreement. On the Closing, Seller and Buyer shall
execute and deliver that certain Fully Disclosed Correspondent Agreement in the
form attached hereto as Exhibit H and hereby made a part hereof relating to
Seller's obligation to clear trades through Buyer (the "Clearing Agreement")
together with the guaranty of Fronteer of such agreement.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF FRONTEER AND SELLER
As an inducement to Buyer to enter into and perform this Agreement,
Fronteer and Seller jointly and severally covenant, represent and warrant to,
and agree with, Buyer as follows:
Section 2.1. Organizational Status. Each of Fronteer and Seller is a duly
organized, validly existing corporation in good standing under the laws of
Colorado, with full power and authority to own, lease and operate its properties
and to carry on its businesses as now being conducted. Seller is duly authorized
to transact business and in good standing under the laws of the states listed in
Schedule 2.1 attached hereto and made a part hereof which constitutes every
State in which the nature of its business or the ownership or leasing of its
properties makes such qualification necessary. Neither Fronteer nor Seller owns
any subsidiaries or other business organizations engaged in the Clearing
Business.
Section 2.2. Authority. (a) Each of Fronteer and Seller has full legal
power and authority to enter into and perform this Agreement and the other
agreements entered into in connection herewith (the "Ancillary Documents"), and,
except for obtaining the required third party consents set forth in Schedule 2.2
attached hereto and hereby made a part hereof, the execution and delivery of
this Agreement and the Ancillary Documents and the consummation of the
transactions contemplated by this Agreement and the Ancillary Documents in
accordance with their terms will not violate any provision of law, or the
articles of incorporation, by-laws, or result in the forfeiture or cancellation
of any license, permit, consent, approval, accreditation or authorization
respecting Fronteer or Seller, or the Securities Business, or result in the
breach, termination, cancellation or acceleration of any provision of or
constitute a default under or result in the creation of any lien, claim or
encumbrance pursuant to any court order, judgment or decree order or any
indenture, license, permit, authorization, or other instrument to which Fronteer
or Seller is a party or by which any of their properties may be bound. Fronteer
and Seller agree to obtain, prior to the Closing Date, all consents of third
parties, which shall be required to sell and transfer to Buyer the Purchased
Assets and to consummate the transactions hereunder.
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(b) All shareholders and directors of Fronteer and Seller have taken all
necessary action to authorize and approve the execution, delivery and
performance of this Agreement and the Ancillary Documents and all of the
transactions contemplated hereby and thereby.
Section 2.3. Seller's Audited Annual Financial Statements Previously
Delivered. (a) Seller has furnished to Buyer copies of audited annual financial
statements of Seller listed and described on Schedule 2.3 attached hereto and
hereby made a part hereof.
(b) Each of the financial statements referred to in paragraph (a) of this
Section 2.3 has been prepared in accordance with generally accepted accounting
principles and practices consistently applied, is true, correct and complete in
all material respects and fairly presents the financial position of Seller, as
of the date thereof or, as the case may be, the results of operations for the
periods covered thereby.
Section 2.4. Seller's Interim Financial Statements Previously Delivered.
(a) Seller has furnished to Buyer copies of the interim financial statements of
Seller listed and described on Schedule 2.4 attached hereto and hereby made a
part hereof.
(b) Each of the financial statements referred to in paragraph (a) of this
Section 2.4 has been prepared in accordance with generally accepted accounting
principles and practices consistently applied (subject to normal year end
adjustments and the absence of footnotes) is true, correct and complete in all
material respects and fairly presents the financial position of Seller, as of
the date thereof or, as the case may be, the results of operations for the
periods covered thereby.
Section 2.5. Fronteer Interim Financial Statements Previously Delivered.
(a) Fronteer has furnished to Buyer copies of the interim consolidated financial
statements of Fronteer and its subsidiaries listed and described on Schedule 2.5
attached hereto and hereby made a part hereof.
(b) Each of the financial statements referred to in paragraph (a) of this
Section 2.5 has been prepared in accordance with generally accepted accounting
principles and practices consistently applied (subject to normal year end
adjustments and the absence of footnotes) is true, correct and complete in all
material respects and fairly presents the consolidated financial position of
Fronteer and its subsidiaries, as of the date thereof or, as the case may be,
the consolidated results of operations for the periods covered thereby.
Section 2.6. Seller's Financial Statements to be Delivered. (a) As soon as
available, but in no event later than thirty (30) days after each month end,
Seller shall deliver to Buyer copies of the unaudited financial statements of
Seller for each month end beginning with November of 1995 and ending with the
last month ending prior to Closing.
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(b) Each of the financial statements referred to in paragraph (a) of this
Section 2.6 will have been prepared in accordance with generally accepted
accounting principles and practices consistently applied (subject to normal
year-end adjustments and the absence of footnotes), will be true, correct and
complete in all material respects and will fairly present the financial position
of Seller, as of the date thereof or, as the case may be, the results of
operations for the period covered thereby.
Section 2.7. Fronteer Financial Statements to be Delivered. (a) As soon as
available, but in no event later than thirty (30) days after the end of each
calendar quarter, Fronteer shall deliver to Buyer copies of the consolidated
unaudited financial statements of Fronteer and its subsidiaries for each
calendar quarter beginning with the calendar quarter ended December 31, 1995 and
ending with the calendar quarter ending prior to Closing.
(b) Each of the financial statements referred to in paragraph (a) of this
Section 2.7 will have been prepared in accordance with generally accepted
accounting principles and practices consistently applied (subject to normal
year-end adjustments and the absence of footnotes), will be true, correct and
complete in all material respects and will fairly present the consolidated
financial position of Fronteer and its subsidiaries, as of the date thereof or,
as the case may be, the results of operations for the period covered thereby.
Section 2.8. Reports. Since December 31, 1989: (i) Fronteer and Seller have
filed all forms, reports, statements and other documents required to be filed
with the Securities and Exchange Commission (the "SEC") including, without
limitation, all FOCUS reports and all amendments and supplements to all such
reports (collectively, the "SEC Reports"), and (ii) Fronteer and Seller have
filed all forms, reports, statements and other documents required to be filed
with any other applicable federal or state regulatory authorities including,
without limitation, state authorities regulating the purchase and sale of
securities (all such forms, reports, statements and other documents in clauses
(i) and (ii) of this Section 2.8 being collectively referred to as the
"Reports"). The Reports, including all SEC Reports filed after the date of this
Agreement and prior to the Closing, (i) were or will be prepared in all material
respects in accordance with the requirements of applicable laws, rules and
regulations (including, with respect to Fronteer and Seller) and (ii) did not at
the time they were filed, or will not at the time they are filed, contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were or will be made, not
misleading. From the date hereof through the Closing Date, Fronteer and Seller
will furnish Buyer with a copy of each SEC Report within ten days after the
filing thereof and a copy of any other Report which may be requested by Buyer.
Section 2.9. Operations. Except as disclosed on Schedule 2.9 attached
hereto and hereby made a part hereof, since September 30, 1995, there has not
been any material adverse change in the business, operations, financial
position, properties and other assets of Seller, and since such date, the
Clearing Business has been conducted in the usual, regular and ordinary manner
and shall continue, through and including the Closing Date, to be conducted in
such manner, unless prior written approval for any variation therefrom shall
have first been secured from Buyer. Except as disclosed on Schedule 2.9 attached
hereto, for the period from September 30, 1995, to and including the Closing
Date, the following is and will be true with respect to Seller:
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(a) All transactions involving Seller, have been accurately and fully
recorded or otherwise reflected in books and records of Seller;
(b) Seller has not sold, exchanged, conveyed or otherwise disposed, or
subjected to lien, pledge, hypothecation, mortgage, or other encumbrance,
any assets or properties included in the description of the Purchased
Assets;
(c) Seller has paid its debts and liabilities, including taxes, fees,
levies and assessments in the ordinary course as they have matured;
(d) Seller has not incurred any debt, obligation or liability other
than those incurred in the ordinary course of their businesses, which are
not of a material nature or amount, and which do not or will not presently,
with the passage of time or upon default, subject to the Purchased Assets
to any lien, claim, charge, mortgage or other encumbrance;
(e) Seller has complied with all laws applicable to the conduct of the
Securities Business;
(f) Seller has conducted the Clearing Business only in the usual,
regular and ordinary course and in substantially the same manner as
theretofore conducted;
(g) Seller has maintained Purchased Assets in a good state of repair,
order and condition, reasonable wear and tear and damage by fire or other
casualty adequately covered by insurance excepted; and
(h) There has not occurred any transaction or event, nor is any
anticipated, which does or may adversely affect the Clearing Business or
the Purchased Assets in any material respect.
Section 2.10. Liabilities and Obligations of Seller. Seller will have on
the Closing Date no debts, liabilities, contracts, commitments or other
obligations, direct or indirect, absolute or contingent, determined or
undetermined, which are not reflected, described or disclosed in (i) the
September 30, 1995 financial statements referred to in Section 2.3 hereof or
(ii) this Agreement or any of the Schedules attached hereto, except those
arising in the ordinary course of business after September 30, 1995, to the time
of the Closing Date which will not be in violation of any representation,
warranty or covenant contained in this Agreement, and will not have a material
adverse effect upon the operations, financial position, prospects or properties
of the Securities Business or the Purchased Assets.
Section 2.11. Title. Seller, has good and marketable title to all of the
Purchased Assets, free and clear of all liabilities, liens, charges, claims,
rights, encumbrances and restrictions on transfers, and no financing statement
covering all or any portion of the Purchased Assets has been filed in any public
office which remains in effect.
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Section 2.12. Condition of Purchased Assets. Except as disclosed on
Schedule 2.12 attached hereto and hereby made a part hereof, all of the
Purchased Assets are in good repair and operating condition free from any
defects, except for ordinary wear and tear and such minor defects as will not
interfere with the continued use thereof in conduct of normal operations.
Section 2.13. Right to Inspect the Properties and Records. Buyer and its
agents, attorneys, accountants, employees, contractors and other authorized
representatives shall have the right, at any reasonable time and from time to
time as Buyer may reasonably deem appropriate, to examine the properties and
records of Fronteer and Seller and to make such tests, surveys, investigations
and other inspections in such manner as Buyer may deem necessary or desirable.
No investigation or examination by Buyer or any of its agents or representatives
of such properties and records of Fronteer or Seller shall affect the
representations and warranties of Fronteer and Seller contained in this
Agreement.
Section 2.14. Insurance. (a) Seller has in effect such insurance coverage
relating to its Clearing Business described on Schedule 2.14 attached hereto and
hereby made a part hereof, which description includes the name of the insurer,
the policy number, the name of the insureds, the type and amount of coverage and
risks insured, and Seller has delivered to Buyer complete and accurate copies of
all such insurance policies. Such insurance coverage, as to amounts and types of
coverage and risks insured, in the reasonable judgment of Seller is adequate for
the Clearing Business as presently conducted.
(b) Schedule 2.14 attached hereto contains a list of all bonds on employees
and other personnel employed by Seller in its Clearing Business. Each of such
bonds is in full force and effect.
Section 2.15. Litigation and Claims. Except as set forth in Schedule 2.15
attached hereto and hereby made a part hereof, there are no litigations, suits,
claims, demands or proceedings pending, in prospect, asserted or to the best
knowledge of Fronteer and Seller, threatened against or relating to Fronteer or
Seller or their respective properties or assets, nor to the best knowledge of
Fronteer and Seller is there any meritorious basis for any such suit, claim,
demand or proceeding, nor is there in existence any judgment or award against
Fronteer or Seller related to or affecting their businesses or the properties or
assets of Fronteer or Seller. Except as set forth in Schedule 2.15 attached
hereto, neither Fronteer nor Seller nor any of their respective officer,
directors or employees is under investigation for violation of any law or
regulation related to or affecting the Securities Business. The financial
statements ofseller and Fronteer referred to in Sections 2.3 and 2.4 hereof
contain adequate reserves for all liabilities which may arise from the matters
disclosed in Schedule 2.15 attached hereto.
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Section 2.16. Employment Obligations. Schedule 2.16 attached hereto and
hereby made a part hereof lists the names, commencement dates of employment and
the current salary and other compensation rates of all present employees of
Seller who perform services in connection with the Clearing Business (the
"Clearing Employees"), together with a listing of all other employment benefits,
including, without limitation, personal leave time, employee loans and the
amount of all profit sharing and pension benefits, which have accrued for such
Clearing Employees as of the date hereof, an accurate summary of any pension,
profit sharing, bonus, medical benefits, insurance or similar arrangements for
such Clearing Employees, salaried or nonsalaried, including any formal or
informal plans, the funding arrangements with regard thereto and all severance
pay and other obligations which would be due Clearing Employees if their
employment was terminated as of the date hereof. Except as and to the extent set
forth on Schedule 2.16 attached hereto or otherwise disclosed herein, there are
no agreements, contracts or understandings between Seller and the Clearing
Employees, with respect to employment, wages, expenses, allowances, vacations,
hours, working conditions, bonuses, salaries, pensions, profit sharing, medical
benefits, insurance benefits, severance pay or otherwise.
Section 2.17. Compliance with ERISA. Seller has no liability or contingent
liability with respect to any "employee welfare benefit plan" or "employee
pension benefit plan" (as those terms are respectively defined in Sections 3(l)
and 3(2) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), including any "multi-employer plan" (as defined in Section 3(37) of
ERISA)), except as set forth on its financial statements heretofore delivered to
Buyer. All Sellers employee benefit plans and fringe benefit arrangements comply
and have been administered in form and in operation, in all material respects,
in compliance with all requirements of law and regulation applicable thereto,
and Seller have not received any notice from any governmental agency questioning
or challenging such compliance.
Section 2.18. Preservation of Business Relationships. Fronteer and Seller
will use their best efforts (without making any commitment on behalf of Buyer)
to preserve for Buyer the relationships of Seller with its Clearing Employees,
agents, customers, and others having business relationships with Seller in
respect of the Clearing Business.
Section 2.19. Material Agreements With Respect to Clearing Business.
Schedule 2.19 attached hereto and hereby made a part hereof accurately describes
all material leases and licenses with respect to any property, real or personal
(whether as landlord, tenant, licensor or licensee), contracts, guarantees,
indentures, agreements, understandings or other commitments, whether oral or
written, of Seller relating to the Clearing Business or the Purchased Assets and
Seller has delivered to Buyer complete and accurate copies of all documents
referred to on Schedule 2.19 attached hereto, each of which is in effect and
valid and enforceable in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors generally and by general
principles of equity.
Section 2.20. Compliance with Laws. (a) Fronteer's and Seller's services,
practices, billings, employee benefits, properties, equipment, machinery,
buildings used, and operations are in compliance in all material respects with
all applicable Federal, state and local laws, statutes, ordinances, codes,
regulations, rules, orders, restrictions and requirements, governmental,
administrative, judicial and otherwise, including, without limitation,
environmental laws and those relating to wages, securities, prices, equal
opportunity, environmental protection, safety, health, medical care, building
and zoning, the Securities Exchange Act of 1934, as amended, and the rules and
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regulations thereunder (the "Exchange Act"), the Investment Advisers Act of
1940, as amended, and the rules and regulations thereunder (the "Advisers Act"),
the rules and regulations of the state commissions regulating the business of
securities broker-dealers in the states in which the Seller is licensed to do
business (the "State B-D Laws"), the rules and regulations of the National
Association of Securities Dealers, Inc. (the "NASD") (the "NASD Rules"), the
rules and regulations of the Municipal Securities Rulemaking Board ("MSRB") (the
"MSRB Rules"), the rules and regulations of the Securities Investor Protection
Corporation ("SIPC") (the "SIPC Rules").
(b) Neither Fronteer nor Seller, nor any of their respective executive
officers, directors, managerial employees or, any other person subject to MSRB
Rule G-37 (including, without limitation, any consultant, adviser, lobbyist or
other agent acting on behalf of or for the benefit of Fronteer or Seller) (such
employees and other persons are collectively referred to herein as the "G-37
Persons") has (i) made or agreed to make any contribution, payment or gift to
any customer, supplier, governmental official, employee or agent where either
the contribution, payment or gift or the purpose thereof was illegal under any
law, rule or regulation of any governmental entity, (ii) established or
maintained any unrecorded fund or asset of Fronteer or Seller for any improper
purpose or made any false entries on its books and records for any reason, (iii)
made or agreed to make any contribution, or reimbursed any political gift or
contribution made by any other person, to any candidate for federal, state or
local public office in violation of any law, rule or regulation of any
governmental entity, (iv) engaged in any activity constituting fraud or abuse
under the laws, rules or regulations relating to the securities industry or the
regulation of securities broker-dealers or (v) made or agreed to make any
contribution, payment or gift to any government official or made or agreed to
make any contribution, or reimbursed any political gift or contribution made by
any other person, to any candidate for state or local public office, in either
case, which would prevent, restrict or otherwise limit the ability of Fronteer
or Seller (prior to the Closing Date) or of Buyer or any affiliate of Buyer
(after the Closing Date) to conduct any aspect of public finance business with
any state, municipal or other local unit of government or agency under Rule
G-37.
(c) All of the respective officers and employees of Fronteer and Seller who
are required to be licensed or registered to conduct the business of Fronteer
and Seller as presently conducted are duly licensed or registered in each state
in which such licensing or regulation is so required (collectively, the
"Registered Representatives"). None of the Registered Representatives is or has
been subject to any disciplinary or other regulatory compliance proceeding that
would, or would be reasonably likely to, prevent, restrict, unduly delay or
otherwise limit the transfer from Seller to Buyer, or the re-licensing or
re-registration by Buyer, of the licenses or registrations of such Registered
Representatives in any state in which such Registered Representatives are
licensed or registered.
Section 2.21. Licenses, Permits and Approvals. (a) Attached hereto as
Schedule 2.21 and hereby made a part hereof is a list and description of all
franchises, grants, licenses, permits, authorizations, certificates, orders,
registrations and approvals required by any Federal, state, local and foreign
laws and government's administrative or judicial authorities in connection with
the operation of the Clearing Business as presently being conducted by Seller
and the ownership of the Purchased Assets by Seller, all of which are in full
force and effect and, except as specifically noted on Schedule 2.21 attached
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hereto, will be transferred to Buyer on the Closing Date. Schedule 2.21 lists
each state in which Seller is licensed as a securities broker-dealer with
respect to its Clearing Business. Fronteer and Seller shall use their best
efforts to assist Buyer in obtaining the franchises, grants, licenses, permits,
authorizations, certificates, orders, registrations and approvals necessary or
appropriate for the operation of the Clearing Business or the ownership of the
Purchased Assets which are not transferable by Seller.
(b) Each of Fronteer and Seller is in possession of all material
franchises, grants, licenses, permits, authorizations, certificates, orders,
registrations and approvals with and under all Federal, state, local and foreign
laws and governments necessary for Fronteer and Seller to own, lease and operate
its properties or to carry on its business as it is now being conducted and no
suspension, revocation or cancellation of any items is pending or, to the best
knowledge of Fronteer and Seller, threatened.
Section 2.22. Ownership of Properties. Except as set forth on Schedule 2.22
attached hereto the Purchased Assets include all properties and assets both
tangible and intangible, real, personal and mixed which are used in the conduct
of the Clearing Business by Seller. All of the Purchased Assets are located at
Seller's offices, One Norwest Center, 1700 Lincoln Street, 32nd Floor, Denver,
Colorado 80203.
Section 2.23. Intellectual Property. All material computer programs,
software, software licenses, copyrights, patents and similar intellectual rights
owned or applied for by Seller or used in connection with the operation of the
Clearing Business are described on Schedule 2.23 attached hereto and hereby made
a part hereof (the "Intellectual Property"). In connection with the Clearing
Business, Seller is not infringing or violating in any material respect, and has
not infringed or violated in any material respect, any adversely held patent,
copyright, trademark, service mark or trade name, nor engaged in any kind of
unfair or unlawful competition nor wrongfully used any confidential information
or trade secrets or patentable inventions of any former employee of Seller or
any other person, firm or corporation. Seller is not wrongfully using any such
information in connection with the Clearing Business. Seller has the right and
authority to use all Intellectual Property as is necessary to enable it to
conduct and to continue to conduct all phases of the Clearing Business in the
manner presently conducted by it, and such use does not, and will not, conflict
with, infringe on, or violate any patent or other rights of others. Except for
necessary third party consents set forth in Schedules 2.2 hereof, Seller has the
right and authority to transfer all Intellectual Property to Buyer in accordance
with this Agreement.
Section 2.24. Investment Representation. (a) Fronteer acknowledges that
Buyer has furnished for its consideration and review any information requested
by Buyer.
(b) Fronteer further acknowledges that it has been given the opportunity to
ask questions and receive answers from Buyer concerning the terms and conditions
set forth herein and the Buyer Stock to be acquired by Fronteer hereunder and to
obtain any additional information necessary to verify the accuracy of the
Investment Information.
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(c) Fronteer represents and warrants (i) that Fronteer is entering into
this Agreement for its own account, (ii) that the Buyer Stock is being acquired
by Fronteer for its own account, (iii) that Fronteer is acquiring the Buyer
Stock for investment and not with a view to, or for sale in connection with, any
distribution thereof, (iv) that Fronteer has no present intention of selling or
distributing the Buyer Stock (v) that Buyer is a newly formed corporation with
no prior operations and the Buyer Stock represents a speculative investment, and
(vi) that Fronteer has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of the acquisition
of the Buyer Stock. Fronteer shall execute and deliver to Buyer on the Closing
Date an investment letter substantially in the form attached hereto as Exhibit I
and hereby made a part hereof (the "Investment Letter").
(d) Fronteer has been informed and understands that the Buyer Stock has not
been registered under the Securities Act of 1933, as amended (the "1933 Act")
(or under any applicable state securities laws), and that Buyer does not
contemplate and is not required to file for such registration.
(e) Fronteer has been advised that the Buyer Stock is authorized and
described in the Certificate of Incorporation of Buyer filed with the Secretary
of State of Colorado.
Section 2.25. Accuracy of Schedules. There has been no material adverse
change in any of the matters reflected in any schedule delivered pursuant to
this Agreement from the respective date thereof to and including the date of
this Agreement, nor will there be any material adverse change in such matters
from the date hereof to and including the Closing Date except as shall be
disclosed to Seller in updated Schedules delivered pursuant to Section 7.2
hereof.
Section 2.26. Basis for Representations and Warranties. Prior to executing
this Agreement, Fronteer and Seller have made such affirmative and thorough
reviews, searches, inspections and inquiries relating to Fronteer and Seller,
the Securities Business and the Clearing Business, and have consulted with such
third parties, which a prudent person might deem necessary or advisable in order
to gain knowledge concerning the matters to which the representations and
warranties relate and each of them shall continue to make such reviews,
searches, inspections and inquiries through the Closing.
Section 2.27. Disclosure. To the best knowledge of Fronteer and Seller, no
representation or warranty made herein by Fronteer or Seller and no certificate
or Schedule given or to be given to Buyer pursuant to this Agreement contains or
will contain any untrue statement of a material fact, or omits or will omit to
state a material fact necessary to make the statements contained herein or
therein under the circumstances under which they were made not misleading. To
the best knowledge of Fronteer and Seller, they have made, and will make in good
faith through the Closing Date, full disclosure of all material facts with
respect to Fronteer, Seller and the Clearing Business which a prudent purchaser
of the Purchased Assets would deem material and relevant in connection with the
transactions provided for in this Agreement.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF BUYER
As an inducement to Fronteer and Seller to enter into and perform this
Agreement, Buyer covenants, represents and warrants to, and agrees with Fronteer
and Seller as follows:
Section 3.1. Corporate Status. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Colorado,
and has full corporate power and authority to enter into this Agreement.
Section 3.2. Authority of Buyer. (a) Subject to Buyer obtaining all
necessary licenses, permits, approvals, consents and authorizations as
contemplated under Section 4.2, Buyer has the full legal power and authority to
enter into and perform this Agreement and the Ancillary Documents to which it is
a party, and the execution and delivery of this Agreement and the Ancillary
Documents and the consummation of the transactions contemplated by this
Agreement and the Ancillary Documents in accordance with their terms will not
violate in any material respect any provision of law, articles of incorporation
or by-laws of Buyer or result in the forfeiture or cancellation of any material
license, permit, consent, approval, accreditation or authorization respecting
Buyer or its business, or result in the material breach, termination,
cancellation or acceleration of any provision of or constitute a default under
or result in the creation of any material lien, claim or encumbrance pursuant to
any material indenture, license, permit, authorization, court order, judgment or
decree agreement or other material instrument to which Buyer is a party or by
which any of their properties may be bound.
(b) The directors of Buyer have taken all necessary action to authorize and
approve the execution, delivery and performance of this Agreement, the Ancillary
Documents and all of the transactions contemplated hereby and thereby.
Section 3.3. Capitalization of Buyer. (a) Buyer has authorized capital of
1,000 shares of Common Stock, of which 200 shares will be issued to Seller and
800 shares will be issued to OFI pursuant to the Subscription Agreement.
(b) There are no outstanding warrants, options, calls, subscriptions,
contracts, rights or other arrangements or commitments obligating Buyer to issue
any additional shares of capital stock, nor are there any securities, debts,
obligations or rights outstanding which are convertible into shares of Buyer's
capital stock.
Section 3.4. Licenses, Permits, Approvals, Etc. Buyer agrees to use
commercially reasonable efforts in good faith to obtain all necessary
governmental, administrative, regulatory, association and other licenses,
permits, approvals, consents, membership certificates, orders, registrations and
authorizations necessary in connection with the operation of the Clearing
Business by Buyer and the consummation of the transactions hereunder.
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ARTICLE 4
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
The obligations of Buyer under this Agreement are, at its option, subject
to the fulfillment at or prior to the Closing Date of each of the following
conditions, upon the nonfulfillment of any of which, at the option of Buyer,
this Agreement may be terminated with the effect set forth in Section 9.2
hereof:
Section 4.1. Accuracy of Representations, Warranties and Covenants. (a) The
representations and warranties of Fronteer and Seller set forth in Article 2
hereof shall be true and correct in all material respects as of the date when
made and as of the Closing Date, except to the extent necessary to reflect the
consummation of the transactions provided for herein and except as otherwise
permitted hereby. Fronteer and Seller shall have delivered to Buyer on the
Closing Date a certificate dated the day of the Closing to the effect set forth
in this Section 4.1(a).
(b) Fronteer and Seller shall have duly performed and complied in all
material respects with all agreements and covenants required by this Agreement
to be performed or complied with by them prior to or on the Closing Date.
Fronteer and Seller shall have delivered to Buyer on the Closing Date a
certificate dated the day of the Closing Date to the effect set forth in this
Section 4.1(b).
Section 4.2. Licenses, Permits, Approvals, Etc. Buyer and its officers,
directors and employees, including Clearing Employees retained by Buyer shall
have obtained all governmental, administrative, regulatory, association and
other licenses, permits, approvals, consents, membership certificates, orders,
registrations and authorizations which, in the opinion of Buyer, are desirable
in connection with the operation of the Clearing Business by Buyer and the
consummation of the transactions hereunder.
Section 4.3. Third Party Consents. All necessary approvals or consents of
third parties, governmental, regulatory, association or otherwise, including,
without limitation, consents to the assignment of any contract, lease,
agreement, license, membership, or other permit, instrument or governmental
agreement to be assigned by Seller hereunder, and to consummation of the
transactions provided for herein, shall have been obtained in form and substance
satisfactory to Buyer and its legal counsel unless waived in writing by Buyer
and shall be in effect.
Section 4.4. No Adverse Changes. There shall have been no material adverse
changes since September 30, 1995, in the condition (financial or otherwise) of
Fronteer or Seller, the Clearing Business or the Purchased Assets. Fronteer and
Seller shall have delivered to Buyer a certificate dated the day of the Closing
Date to the effect set forth in this Section 4.4.
Section 4.5. Approval of Legal Matters by Counsel. There shall have been
furnished to counsel for Buyer certified copies of such corporate and business
records of Fronteer and Seller and copies of such documents as such counsel may
reasonably have requested. All legal matters and proceedings in connection with
this Agreement, the Ancillary Documents and the transactions contemplatedhereby
and thereby shall have been reasonably satisfactory to counsel for Buyer.
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Section 4.6. No Adverse Proceedings. There shall be no action, suit,
proceeding or claim instituted or threatened by Fronteer, Seller or a third
party relating to the transactions contemplated by this Agreement or the
Ancillary Documents which would delay or materially adversely affect the
consummation of the transactions hereby and thereby or the Clearing Business.
Section 4.7. Receipt of Closing Documents. Buyer shall have received all of
the closing documents referred to in Section 6.1 hereof.
Section 4.8. Approval of Schedules and Documents. All Schedules required to
be provided to Buyer pursuant to Article 2 and Section 7.2 hereof, and all
financial statements and other documents to be provided to Buyer shall be
reasonably satisfactory to Buyer in all respects.
ARTICLE 5
CONDITIONS PRECEDENT TO OBLIGATIONS OF FRONTEER AND SELLER
The obligations of Fronteer and Seller under this Agreement are, at the
option of Seller, subject to the fulfillment at or prior to the Closing Date of
each of the following conditions, upon the unfulfillment of any of which, at the
option of Seller, this Agreement may be terminated with the effect set forth in
Section 9.2 hereof:
Section 5.1. Accuracy of Representations, Warranties and Covenants. The
representations and warranties of Buyer set forth in Article 3 hereof shall be
true and correct in all material respects as of the date when made and as of the
Closing Date, except to the extent necessary to reflect the consummation of the
transactions provided for herein and except as otherwise permitted hereby. Buyer
shall have duly performed and complied in all material respects with all
agreements, covenants and conditions required by this Agreement to be performed
or complied with by them prior to or on the Closing Date. Buyer shall have
delivered to Seller a certificate dated the day of the Closing Date to the
effect set forth in this Section 5.1.
Section 5.2. Capitalization of Buyer. Buyer shall have initial capital
consisting of equity and debt of at least Five Million Dollars ($5,000,000) plus
amounts payable by Buyer to Seller pursuant to Section 1.6(a) hereof and plus
amounts payable by Buyer to Seller pursuant to Section 1.8 hereof or minus
amounts payable by Seller to Buyer pursuant to Section 1.8 hereof.
Section 5.3. Approval of Legal Matters by Counsel. There shall have been
furnished to counsel for Fronteer and Seller certified copies of such corporate
records of Buyer and copies of such documents as such counsel may reasonably
have requested. All legal matters and proceedings in connection with this
Agreement, the Ancillary Documents and the transactions contemplated hereby and
thereby shall be reasonably satisfactory to counsel for Fronteer and Seller.
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Section 5.4.Receipt of Closing Documents;. Seller shall have received all
of the closing documents referred to in Section 6.2 hereof.
ARTICLE 6
CLOSING DOCUMENTS
Section 6.1.Documents to be Delivered by Seller to Buyer;. Seller agrees to
deliver to Buyer on the Closing Date the following:
(a) Bills of Sale, Assignments and Transfers. Good and sufficient
bills of sale, assignments, instruments of conveyance, certificates of
title and other instruments of transfer, duly executed by Seller, in forms
satisfactory to Buyer and its counsel with covenants or warranties as shall
be necessary to assign and transfer to and vest in Buyer good and
merchantable title to all the Purchased Assets, free and clear of any and
all liabilities, liens, claims and encumbrances.
(b) Consents to Assignments. All consents of third parties which are
necessary, in the opinion of counsel for Buyer, to effectively transfer the
Purchased Assets in the manner provided for herein, in form and substance
satisfactory to said counsel unless waived in writing by Buyer.
(c) Certificates. Certificate of the Presidents of Fronteer and Buyer
dated the Closing Date, certifying that the conditions precedent set forth
in Sections 4.1(b) and 4.4 hereof have been fulfilled.
(d) Certificates of Secretarial Officers. Certificate of the
Secretaries of Fronteer and Seller dated the Closing Date with respect to
(i) the Articles of Incorporation of Fronteer and Seller, (ii) the By-laws
of Fronteer and Seller, (iii) the corporate director resolutions
contemplated hereby, and (iv) the incumbency of certain officers of
Fronteer and Seller and the specimen signatures of those officers of Seller
executing documents.
(e) Articles of Incorporation. Articles of incorporation and all
amendments thereto of Fronteer and Seller certified by the Secretary of
State of the State of Colorado as of a date not more than thirty (30) days
prior to the Closing Date.
(f) Good Standing Certificates. Certificates of good standing for
Fronteer and Seller issued by the Secretary of State of Colorado, each
dated not more than thirty (30) days prior to the Closing Date.
(g) Lien Search. Good and sufficient evidence reasonably satisfactory
to counsel for Buyer that (i) there are no chattel mortgages, security
interests, judgments, claims or other liens outstanding against any of the
Purchased Assets, (ii) Seller has good, marketable title to all of the
Purchased Assets and (iii) Buyer's security interest under the Pledge
Agreement will constitute a good first lien on the Pledged Securities.
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(h) Counsels Opinion. Legal opinion of counsel for Fronteer and Seller
addressed to Buyer, dated the Closing Date, to the effect set forth in
Exhibit J and hereby made a part hereof;
(i) Certificates of Title. Certificates of title or origin (or like
documents) with respect to all vehicles included in the Purchased Assets
and other equipment for which a certificate of title or origin is required
in order for title thereto to be transferred to Purchaser.
(j) Fronteer and Seller Agreement Not to Compete. The Agreement Not to
Compete executed by Fronteer and Seller in the form attached hereto as
Exhibit K and hereby made a part hereof (the "Agreement Not to Compete").
(k) O'Leary Employment Agreement and Wilson Employment Agreement. The
O'Leary Employment Agreement (the "O'Leary Employment Agreement") executed
by Peter O'Leary and the Wilson Employment Agreement (the "Wilson
Employment Agreement") executed by Arlene Wilson in the forms attached
hereto respectively as Exhibits L-1 and L-2 and hereby made a part hereof.
(l) Sub-Lease Agreement. The Sub-Lease Agreement executed by Fronteer.
(m) Investment Letter. The Investment Letter executed by Fronteer.
(n) Software Agreement and License Agreement. The Software Agreement
and the License Agreement executed by Secutron and the guaranty thereof by
Fronteer.
(o) Facilities Agreement. The Facilities Agreement executed by
Secutron and the guaranty thereof by Fronteer.
(p) Shareholders Agreement. The Shareholders Agreement executed by
Fronteer.
(q) Clearing Agreement. The Clearing Agreement executed by Seller and
the guaranty thereof by Fronteer.
(r) Note. The Note executed by Fronteer.
(s) Pledge Agreement. The Pledge Agreement executed by Fronteer
together with the Pledged Securities thereunder and appropriate
assignments.
Section 6.2. Documents to be Delivered by Buyer. Buyer agrees to deliver to
Seller, on the Closing Date the following:
(a) Officer's Certificates. Certificates of the President or a Vice
President of Buyer dated the Closing Date certifying that the conditions
precedent set forth in Section 5.1 hereof have been fulfilled.
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(b) Certificate of Secretarial Officers of Buyer. Certificate of the
Secretary or an Assistant Secretary of Buyer dated the Closing Date with
respect to (i) the articles of incorporation of Buyer, (ii) the by-laws of
Buyer, (iii) corporate director resolutions contemplated hereby, and (iv)
the incumbency of certain officers of Buyer and the specimen signatures of
those officers of the particular corporation executing documents.
(c) Articles of Incorporation. Articles of Incorporation of certified
by the Secretary of State of the State of Colorado, as of a date not more
than thirty (30) days prior to the Closing Date.
(d) Good Standing Certificate. Certificates of good standing for Buyer
issued by the Secretary of State of the State of Colorado and dated not
more than thirty (30) days prior to the Closing Date.
(e) Transfer of Funds. A wire transfer of funds representing the
Closing Cash Payment as provided in Section 1.6 hereof.
(f) Software Agreement and License Agreement. The Software Agreement
and License Agreement executed by Buyer.
(g) Facilities Agreement. The Facilities Agreement executed by Buyer.
(h) Sub-lease Agreement. The Sublease Agreement executed by Buyer.
(i)Shareholders Agreement. The Shareholders Agreement executed by
Buyer.
(j) Clearing Agreement. The Clearing Agreement executed by Buyer.
(k) Counsel's Opinion. Legal opinion of counsel for Buyer, which may
be Buyer's in-house counsel, addressed to Fronteer andSeller, dated the
Closing Date in the form attached hereto as Exhibit M and hereby made a
part hereof.
(l) Stock Certificate. The stock certificate for the Buyer Stock
issued in the name of Fronteer.
(m) Other Documents. Such other documents and showings as shall
reasonably be required by Fronteer, Seller and their counsel.
ARTICLE 7
FURTHER AGREEMENTS
Section 7.1. Commissions and Expenses of Sale. Each party to this Agreement
shall bear its own legal, accounting and other related expenses in connection
with the purchase and sale provided for herein. Each of the parties hereto
represents and warrants that it has not incurred any obligation or liability,
contingent or otherwise, for broker's finder's or advisor's fees in connection
with the transactions provided for herein and each agrees to hold the others
harmless from and against all such liability arising out of contracts, express
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or implied, which may be asserted against the non-contracting parties. The
parties acknowledge that Seller may pay certain additional compensation to
certain of its employees in connection with the transactions contemplated
hereunder and Seller shall be solely responsible for any such liability and hold
Buyer harmless from any such liability.
Section 7.2. Updating of Schedules. The Schedules which have been delivered
by Seller to Buyer prior to the execution of this Agreement have been prepared
by Seller. Prior to the Closing Date Seller will update such schedules to
include information as of such date as may be requested by Buyer from time to
time and such information as provided by Seller pursuant to Section 2.25 hereof
and delivered to Buyer with any and all changes specifically marked so that all
such Schedules are true, accurate and complete in all respects.
Section 7.3. Clearing Employees. Fronteer and Seller agree that Buyer shall
offer employment to all of the Clearing Employees to commence upon the Closing
Date on such terms and conditions as Buyer shall, in its sole discretion, agree
upon; provided, however, Buyer shall not offer future salary to any of the
Clearing Employees which is less than the current salary being paid by Seller to
such Clearing Employee as set forth in Schedule 2.16 attached hereto, subject to
any increases in salary in the ordinary course of business after the date
hereof, but in no event more than four 4% as to any employee. Buyer shall not be
responsible for any of Seller's obligations to any Clearing Employees, whether
or not employed by Buyer. Fronteer and Seller shall be fully responsible for all
obligations to such Clearing Employees and shall pay the Clearing Employees all
accrued salary, bonuses, vacation pay and other compensation as of the Closing
Date.
Section 7.4. Operation of Clearing Business after Closing. Buyer agrees to
use commercially reasonable efforts in good faith to continue the operation of
the Clearing Business in the normal course during the period from the Closing to
the Second Determination Date, as such term is defined in the Note.
Section 7.5. New Clearing Agreements. Seller agrees to use commercially
reasonable efforts in good faith to assist Buyer to obtain and retain Seller's
clearing customers as clearing customer of Buyer.
Section 7.6. Services of Robert A. Fitzner, Jr. Fronteer and Seller agree
that so long as Fronteer owns, directly or indirectly, shares of Buyer Stock,
they will cause Robert A. Fitzner, Jr. to provide consulting services to Buyer
with respect to Buyer's Clearing Business for a minimum of 15 hours per week
without charge, except that Buyer shall reimburse Fronteer and Seller for any
out-of-pocket expenses incurred in connection with such consulting services
other than compensation for the services of Mr. Fitzner.
Section 7.7. Guaranty of Fronteer. The Guaranty of Fronteer of the Software
Agreement, the License Agreement and the FacilitiesAgreement shall be in the
form attached hereto as Exhibit N and hereby made a part hereof.
Section 7.8. Voting Control of Secutron, Frank Horwich Employment. Fronteer
agrees that during the term of the Clearing Agreement it shall take all
necessary action in order to maintain control of at least 51% of the voting
securities of Secutron so as to enable it to elect a majority of the board of
directors of Secutron during such term. Fronteer shall provide Buyer with
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appropriate evidence of such arrangements to maintain voting control from time
to time as may be requested by Buyer. Fronteer further agrees that on or before
the Closing, Secutron shall enter into a three-year employment agreement with
Frank Horwich in form and substance reasonable and satisfactory to Buyer and
provide evidence of the same to Buyer on or before the Closing.
ARTICLE 8
SURVIVAL OF REPRESENTATIONS AND WARRANTIES, INDEMNIFICATION
Section 8.1. Survival of Representations and Warranties. Any investigation
or examination by either Buyer, on the one hand, or Fronteer and Seller, on the
other hand, of the business, or properties or affairs of the others shall not
affect the representations and warranties of such persons set forth herein. The
representations and warranties made by the parties in Articles 2 and 3 hereof
shall be deemed to be remade at and survive the Closing Date.
Section 8.2. Indemnification by Fronteer and Seller. Each of Fronteer and
Seller agree jointly and severally to indemnify and hold OFI, and Buyer and
their respective directors and officers, harmless from and against all
liability, loss, cost or expense, including, without limitation, attorneys'
fees, expenses and costs of litigation ("Losses"), OFI, Buyer and/or any such
person may sustain by reason of any of the following:
(a) The inaccuracy of any representation or warranty of Fronteer or
Seller herein set forth or in any certificate or other document delivered
by Fronteer or Seller, to Buyer in accordance with the terms hereof;
(b) The breach of any of the agreements or covenants of Fronteer or
Seller contained herein or in any certificate or other document or
agreement delivered by Fronteer or Seller to Buyer in accordance with the
terms hereof;
(c) Failure to comply with the Bulk Transfer Acts;
(d) Any suits, claims, demands, litigation, proceedings or matters
arising out of, or in any manner connected with, the consummation of the
transactions contemplated under this Agreement, asserted or claimed to be
asserted by any present director, officer, stockholder, employee,
contractor or agent of Fronteer, Seller or Secutron; and
(e) The failure of Seller to satisfy and discharge any obligations or
liabilities arising out of the Excluded Obligations.
Section 8.3. Indemnification by Buyer. Buyer agrees to indemnify and hold
Fronteer and Seller and their respective directors and officers harmless from
and against all Losses which Fronteer, Seller, and/or any such person may
sustain by reason of any of the following:
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(a) The inaccuracy of any representation or warranty of Buyer herein
set forth or in any certificate or other document delivered by Buyer to
Fronteer or Seller in accordance with the terms hereof;
(b) The breach of any of the agreements or covenants of Buyer
contained herein or in any certificate or other document or agreement
delivered by Buyer to Fronteer or Seller in accordance with the terms
hereof;
(c) The failure of Buyer to satisfy and discharge any obligations or
liabilities arising out of the Assumed Obligations; and
(d) Any suits, claims, demands, litigation, proceedings or matters
arising out of, or in any manner connected with, the consummation of the
transactions contemplated under this Agreement, asserted or claimed to be
asserted by any person who is an officer, director, shareholder, employee,
contractor or agent of OFI.
ARTICLE 9
TERMINATION, AMENDMENTS AND WAIVER
Section 9.1. Termination. This Agreement may not be terminated at any time
prior to the Closing Date by any party, except that this Agreement may be
terminated:
(a) by mutual written consent of the parties hereto:
(b) by either Buyer, on the one hand, or Seller on the other hand, by
written notice to the other, if the Closing shall not have occurred on or
before June 28, 1996, or such later date to which the parties shall have
extended this Agreement by mutual written consent;
(c) by Buyer, if there has been a misrepresentation, breach of
warranty or failure to perform any agreement or covenant on the part of
Fronteer or Seller, in any of their representations, warranties, agreements
or covenants set forth in this Agreement resulting in the failure of any
condition in Article 4 hereof;
(d) by Seller, if there has been a misrepresentation, breach of
warranty or failure to perform any agreement or covenant on the part of
Buyer in any of its representations, warranties, agreements or covenants
set forth in this Agreement resulting in the failure of any condition in
Article 5 hereof.
Any termination of this Agreement pursuant to this Section 9.1 shall be by
notice in writing to the other party.
Section 9.2. Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 9.1 hereof or the Closing does not occur by reason
of any of the conditions in Articles 4 and 5 hereof not being satisfied, then
there shall be no liability on the part of any party to the other, except that
such termination shall not preclude liability attaching to a party who has
caused the termination hereof by willful act or willful failure to act in
violation of the terms and provisions of this Agreement.
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Section 9.3. Amendment. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
Section 9.4. Waiver. Any terms or provisions of this Agreement may be
waived in writing at any time by the party which is entitled to the benefits
thereof, or their respective counsel. The failure of either party at any time or
times to require performance of any provision hereof shall in no manner affect
such party's right at a later time to enforce the same. No waiver by any party
of a condition or of the breach of any term, covenant, representation or
warranty of this Agreement, whether by conduct or otherwise, in any one or more
instances shall be deemed to be or construed as a further or continuing waiver
of any such condition or breach or a waiver of any other condition or of the
breach of any other term, covenant, representation or warranty of this
Agreement.
ARTICLE 10
MISCELLANEOUS PROVISIONS
Section 10.1. Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if personally delivered, telegraphed or mailed by registered or
certified mail (return receipt requested) to the parties at the following
addresses (or at such other address for a party as shall be specified by such
party by like notice):
(a) If to Buyer at:
c/o Oppenheimer
Funds Inc.
Two World Trade Center
34th Floor
New York, New York 10048-0669
Attention: Andrew J. Donohue, Esq., Executive Vice
President and General Counsel
with a copy to:
Chapman and Cutler
111 West Monroe, Suite 1500
Chicago, Illinois 60603-4080
Attention: Eric F. Fess and Terence T. O'Meara
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<PAGE>
(b) If to Fronteer or Seller:
RAF Financial Corporation
1700 Lincoln Street, 32nd Floor
Denver, Colorado 80203
Attention: R.A. Fitzner, Jr., President
Written notice given by any other method shall be deemed effective only
when actually received by the party to whom given.
Section 10.2. Further Assurance. Each of the parties hereto hereby agrees
that after the Closing Date, it will from time to time, upon the reasonable
request of another party hereto, take such further action as the other may
reasonably request to carry out the transfer and sale of assets and assumption
of liabilities contemplated by this Agreement, including, without limitation,
the execution and delivery of all further evidences and instruments of transfer
and assignment.
Section 10.3. Execution and Counterparts. This Agreement may be executed in
any number of counterparts, each and all of which shall be deemed for all
purposes to be one agreement.
Section 10.4. Headings. The headings in this Agreement are intended solely
for convenience of reference and shall be given no effect in the construction or
interpretation of this Agreement.
Section 10.5. Miscellaneous;. This Agreement (a) constitutes the entire
agreement and supersedes all other prior agreements and undertakings, both
written and oral, between the parties, with respect to the subject matter
hereof; (b) is not intended to confer upon any other person any rights or
remedies hereunder, it being expressly agreed that there are no third party
beneficiaries of this Agreement, including any creditors of Seller; c) shall be
binding upon and inure to the benefit of Buyer, Fronteer Seller, and their
respective permitted successors and assigns; (d) may not be assigned by any
party prior to the Closing (e) shall be governed in all respects, including
validity, interpretation and effect, by the laws of the State of Colorado.
Section 10.6. Publicity. Neither the parties to this Agreement nor their
respective directors, officers, stockholders, employees or agents shall, issue
any press release or other announcement with respect to this Agreement, or
otherwise make any disclosures relating thereto to the press without the prior
consent of the other parties, which consent shall not be unreasonably withheld;
provided, however, that such consent shall not be required where such release,
announcement or disclosure is required by applicable law or the rules or
regulations of a securities exchange, other self-regulatory authority or
governmental agency.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
FRONTEER DIRECTORY COMPANY, INC.
By /s/ Dennis W. Olson
-------------------------------
Dennis W. Olson, President
RAF FINANCIAL CORPORATION
By /s/ R. A. Fitzner, Jr.
-------------------------------
R.A. Fitzner, Jr., President
MULTISOURCE SERVICES, INC.
By /s/ Kenneth C. Eich
------------------------------
Kenneth C. Eich, CEO
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EXHIBIT B
PURCHASE PRICE ALLOCATION
A)
Section 1.1(a) Clearing Business - Goodwill $ 1,332,588.02
Section 1.1(e) Furniture and Fixtures 67,411.98
Section 6.1(j) Agreement not to compete 100,000
-----------
$ 1,500,000.00
B) The $1.5 million of purchase price contingent on clearing
revenues shall be assigned to Goodwill when earned.
<PAGE>
SECURED PROMISSORY INSTALLMENT NOTE
$1,500,000.00 July 23, 1996
On the dates hereinafter prescribed, for value received, Fronteer Financial
Holdings, Ltd., f/k/a Fronteer Directory Company, Inc., a Colorado corporation
("Maker") promises to pay to the order of MultiSource Services, Inc., a Colorado
corporation, (herein called the "Payee"), at 3410 South Galena, Denver, Colorado
80231, the principal amount of $1,500,000.00.
Maker shall make principal payments to Payee in two equal installments of
$750,000.00 each on the 30th day after the First Determination Date (as
hereinafter defined) and on the 30th day after the Second Determination Date (as
hereinafter defined). All payments made by the Maker hereunder shall be applied
first to accrued interest and then to principal.
This Note shall not bear interest so long as no principal payment is in
default. Maker shall pay interest on any amount past due principal at a rate of
interest equal to ten percent (10%) per annum.
This Note is issued pursuant to that certain Agreement for Sale and
Purchase of Certain Business and Assets of RAF Financial Corporation ("RAF")
dated as of January 29, 1996, by and among Maker, RAF and Payee (the "Purchase
Agreement"). The payment of this Note is secured by that certain Pledge
Agreement (the "Pledge Agreement") of even date herewith executed by Maker, in
favor of the Payee, as Secured Party, and covering and describing certain
collateral. Reference is made to the Pledge Agreement for a full statement of
all the terms and conditions thereof. This Note shall become immediately due and
payable, at the option of the Payee or other holder hereof, without presentment
or demand or any notice to the Maker, as provided in the Pledge Agreement.
Payee agrees that certain principal amounts of this Note shall be canceled,
and Maker shall be released of the obligation to make the payment thereof upon
the following terms and conditions.
(i) As used herein the term "Outside Ticket Revenue" shall mean all
revenues from clearing operations, except pass-through expenses and margin
interest income, collected by Payee from RAF and all other clearing
customers, provided, however, that only 50% of such revenues from the
following affiliates of Payee and customers referred to Payee by such
affiliates shall be included in Outside Ticket Revenue: Oppenheimer Funds,
Inc. ("OFI"), Oppenheimer Acquisition Corp. ("OAC"), Massachusetts Mutual
Life Insurance Company ("Mass Mutual"), MassMutual Holding Company ("MM
Holding") and any direct or indirect subsidiaries or affiliates of Payee,
OFI, OAC, MassMutual or MM Holding.
EXHIBIT C-1
<PAGE>
(ii) The term "First Determination Date" shall mean the last day of
the 16th month after the month during which the "Conversion Date" occurs.
The "Conversion Date" shall mean the day that Payee begins acting as the
clearing agent for RAF. The term "Second Determination Date" shall mean the
last day of the 28th month after the month during which the Conversion Date
occurs.
(iii) In the event the Outside Ticket Revenue received by Payee for
the 12-month period ending on the First Determination Date exceeds
$1,250,000 then, in such event, the initial principal installment of
$750,000 plus accrued interest thereon shall be canceled. In the event the
Outside Ticket Revenues are less than $1,250,000 for such 12-month period,
then there shall be no cancellation of all or any part of the installment
payment or accrued interest due.
(iv) In the event the Outside Ticket Revenue received by Payee for the
12-month period ending on the Second Determination Date exceeds
$1,750,000.00 then, in such event, the second principal installment of
$750,000.00 plus accrued interest thereon shall be canceled. In the event
the Outside Ticket Revenues are less than $1,750,000.00 for such 12-month
period, then there shall be no cancellation of all or any part of the
installment payment or accrued interest due.
(v) The Outside Ticket Revenues for the periods herein stated shall be
determined by Payee and confirmed to Maker by delivery with 25 days after
the end of the applicable 12-month period of a written certificate executed
by the chief financial officer of Payee. The determinations hereunder shall
be based on a separate calculation for each 12-month period and shall not
be on a cumulative basis. Any excess Outside Ticket Revenues above
$1,250,000.00 in the first 12-month period shall not be carried forward in
determining Outside Ticket Revenues for the second 12-month period. Any
shortfall of Outside Ticket Revenues below $1,250,000.00 in the first
12-month period shall not affect the calculation of Outside Ticket Revenues
for the second 12-month period.
(vi) In the event Payee ceases to engage in the Clearing Business (as
defined in the Purchase Agreement) during the 12-month period ending on the
First Determination Date then, in such event, the initial and second
principal installments of $750,000 each plus accrued interest thereon shall
be cancelled.
(vii) In the event Payee ceases to engage in the Clearing Business (as
defined in the Purchase Agreement) during the 12-month period ending on the
Second Determination Date then, in such event, the second principal
installment of $750,000 plus accrued interest thereon shall be cancelled.
If this Note is collected by suit or through the Bankruptcy Court, or any
judicial proceeding, or if this Note is not paid at maturity, however such
maturity may be brought about, and is placed in the hands of an attorney for
collection, then the Maker agrees to pay reasonable attorney's fees and costs.
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The Maker waives grace, protest, filing of suit, notice, presentment and
demand for payment, and consent that any extension of the time of payment of
this Note, or any part thereof, may be granted without notice.
FRONTEER FINANCIAL HOLDINGS, LTD., f/k/a
FRONTEER DIRECTORY COMPANY, INC.
By /s/ R. A. Fitzner, Jr.
------------------------------------
R.A. Fitzner, Jr.,
Chairman of the Board
Approved as to form:
MULTISOURCE SERVICES, INC.
By /s/ Andrew J. Donahue
---------------------------------
Andrew J. Donahue
Executive Vice President
<PAGE>
PLEDGE AGREEMENT TO MULTISOURCE SERVICES, INC.
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, Fronteer Financial
Holdings, Ltd., f/k/a Fronteer Directory Company, Inc., a Colorado corporation
("Fronteer" or "Pledgor,"), for and in consideration of Ten Dollars ($10.00) and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, does hereby assign, transfer and pledge unto MultiSource
Services, Inc., a Colorado corporation, (the "Secured Party"), and does hereby
grant the Secured Party a security interest in, all securities of Secutron
Corp., a Colorado corporation ("Secutron") and of the Secured Party, listed in
Annex A attached hereto, and all securities of Secutron or the Secured Party
which the Pledgor may hereafter acquire from Secutron or the Secured Party
(hereinafter collectively referred to as the "Pledged Securities").
This Agreement is made as, and the Pledged Securities shall at all times
constitute, collateral security for the payment in full of all principal of and
interest on the Secured Promissory Installment Note of the Pledgor in the
principal amount of One Million Five Hundred Thousand Dollars ($1,500,000) dated
the date hereof and made payable to the order of the Secured Party, (a copy of
the form of said Note being attached hereto as Annex B and hereby made a part
hereof, and any note or notes issued in exchange or substitution therefor, being
hereinafter referred to as the "Note"), and the payment of all expenses and
charges, legal or otherwise, paid or incurred by the Secured Party and/or
holders from time to time of the Note in realizing upon or protecting this
Agreement and the indebtedness hereby secured.
In addition to the foregoing, this Agreement is made on and subject to the
following terms and conditions:
(a) The certificates or instruments for all shares of stock or other
securities now or at any time constituting the Pledged Securities shall be
delivered to the Secured Party duly endorsed in blank for transfer or
accompanied by an assignment or assignments sufficient to transfer title
thereto.
(b) If an event of default as hereinafter specified or an event as
hereinafter specified which, with notice or lapse of time or both, would
become such an event of default has occurred and is continuing, the Secured
Party may, in addition to all other rights and remedies it may have, cause
to be transferred to its name or into the name of its nominee or nominees,
any and all of the Pledged Securities.
(c) The Pledgor represents, warrants and agrees to and with the
Secured Party that (i) it is and at all times will be the owner of all of
the Pledged Securities to be deposited by it hereunder, (ii) the Pledged
Securities will be free and clear of all liens, encumbrances and security
interests, (iii) execution and performance of this Agreement in accordance
with its terms does not and will not violate the provisions of any
applicable law or require the approval of any court or other governmental
or non-governmental body, and does not and will not conflict with, result
Exhibit C-2
<PAGE>
in a breach of, or constitute a default under any indenture, agreement or
other instrument to which Pledgor is a party or by which the securities
pledged hereby may be bound, (iv) Pledgor shall not sell, offer to sell,
lease, convey or otherwise transfer or dispose of the Pledged Securities,
and (v) Pledgor shall not permit the Pledged Securities to become subject
to any security interest, lien, or other encumbrance;
(d) Unless and until an event of default as hereinafter specified or
an event as hereinafter specified which, with notice or lapse of time or
both, would become such an event of default has occurred and is continuing:
(1) The Pledgor shall be entitled to exercise all voting and/or
consensual powers pertaining to the Pledged Securities or any part
thereof, for all purposes not inconsistent with the terms of this
Agreement;
(2) The Pledgor shall be entitled to receive and retain all
ordinary dividends or interest which are paid in cash on the Pledged
Securities, but all stock or property representing stock or
liquidating dividends or a distribution or return of capital upon or
in respect of the Pledged Securities or any part thereof or received
in exchange for the Pledged Securities or any part thereof as a result
of a merger, consolidation or otherwise, shall be delivered or
transferred directly to the Secured Party immediately upon receipt
thereof by the Pledgor and/or shall be retained by the Secured Party
as part of the Pledged Securities;
(3) In case any money shall be paid on account of any dividend or
other distribution upon or in respect of the Pledged Securities or any
part thereof, other than an ordinary dividend or interest which a
Pledgor is entitled to receive and retain under clause (2) above, such
money shall be immediately paid to the Secured Party;
(4) In order to permit the Pledgor to exercise such voting and/or
consensual powers and to receive such dividends and interest which it
is entitled to receive and retain under clause (2) above, the Secured
Party shall, if necessary, upon the written request of a Pledgor, from
time to time execute and deliver to a Pledgor appropriate proxies,
dividend orders or other documents;
(5) In order to permit the Secured Party to receive all property
to which it may be entitled under clause (2) or (3) above, the
Pledgors shall, if necessary, upon thewritten request of the Secured
Party, from time to time execute and deliver to the Secured Party
appropriate dividend orders and other documents; and
(6) All cash and other property paid to and/or retained by the
Secured Party pursuant to this paragraph (d) shall be held by it as
additional collateral pledged under and subject to the terms of this
Agreement.
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(e) If an event of default specified below or an event specified below
which, with notice or lapse of time or both, would become such an event of
default has occurred and is continuing, in addition to all other rights and
remedies which the Secured Party may have and without limiting any of the
provisions hereof, the rights of the Pledgor in respect of the Pledged
Securities set forth in paragraph (d) hereof shall immediately vest in the
Secured Party.
(f) The term "event of default" for the purpose hereof shall mean any
one or more of the following:
(1) Default by the Pledgor in the payment of any part of the
principal of the Note when the same shall become due and payable,
whether at maturity or by acceleration or otherwise, and such default
shall continue for a period of thirty (30) days after the due date
thereof; or
(2) Default in the due observance or performance by the Pledgor
of any covenant, condition or agreement required to be observed or
performed by the Pledgor by the terms of this Agreement and such
default shall continue for thirty (30) days after written notice
thereof to the Pledgor by the Secured Party; or
(3) The Pledgor becomes insolvent or bankrupt or admits in
writing the inability to pay its debts as they mature, or makes an
assignment for the benefit of creditors or applies or consents to the
appointment of a trustee or receiver for any part of its property; or
(4) A trustee or receiver is appointed for any part of the
property of the Pledgor and is not discharged within thirty (30) days
after such appointment; or
(5)Bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other proceedings for relief under any
bankruptcy law or similar law for the relief of debtors, are
instituted by or against the Pledgor and, if instituted against the
Pledgor, are consented to or are not dismissed within thirty (30) days
after such institution.
(g) When any such event of default above specified has happened and is
continuing, the Secured Party shall have the rights, options and remedies
of a secured party, and the Pledgor shall have the duties of a debtor,
under the Colorado Uniform Commercial Code (regardless of whether such Code
or law similar thereto has been enacted in the jurisdiction wherein the
rights or remedies are asserted), and without limiting the foregoing, the
Secured Party may exercise any one or more or all, and in any order, of the
remedies hereinafter set forth, in being expressly understood that no
remedy herein conferred is intended to be exclusive of any other remedy or
remedies; but each and every remedy shall be in addition to every other
remedy given herein or now or hereafter existing at law or in equity or by
statute:
-3-
<PAGE>
(1) The Secured Party may, by notice in writing to the Pledgor,
declare the entire unpaid balance of the Note to be immediately due and
payable, and thereupon all such unpaid balance, together with all accrued
interest thereon, shall be and become immediately due and payable;
(2) The Secured Party may, if at the time such action may be lawful
and always subject to the compliance with any mandatory legal requirements,
without instituting any legal proceedings whatsoever, and after having
first given notice of such sale by registered mail to the Pledgor on at
least ten (10) days prior to the date of such sale, and any other notice
which may be required by law, sell and dispose of the Pledged Securities,
or any part thereof, at any broker's board or at public or private sale, in
one lot as an entirety or in separate lots, and either for cash or on
credit, and on such terms as the Secured Party may determine, and at any
place designated in the notice above referred to. Any such sale or sales
may be adjourned from time to time by announcement at the time and place
appointed for such sale or sales, or for any such adjourned sale or sales,
without further notice, and the Secured Party or any other holder of the
Note, or of any interest therein, may bid and become the purchaser at any
such sale; and
(3) The Secured Party may proceed to protect and enforce this
Agreement and the Note by suit or suits or proceedings in equity, at law or
in bankruptcy, and whether for the specific performance of any covenant or
agreement herein contained or in execution or aid of any power herein
granted, or for foreclosure hereunder, or for the appointment of a receiver
or receivers for the collateral or any part thereof, or for the recovery of
judgment for the indebtedness hereby secured, or for the enforcement of any
other proper legal or equitable remedy available under applicable law.
(h) In case of any sale of the Pledged Securities, or of any part
thereof, pursuant to any judgment or decree of any court or otherwise in
connection with the enforcement of any of the terms of this Agreement, the
principal of the Note, if not previously due, and the interest accrued
thereon, shall at once become and be immediately due and payable; also, in
case of any such sale, the purchaser or purchasers for the purpose of
making settlement for or payment of the purchase price, shall be entitled
to turn in and use the Note or any part thereof and any claims for interest
matured and unpaid thereon, in order that there may be credited as paid on
the purchase price the sum apportionable and applicable to the Note
including principal and interest thereof out of the net proceeds of such
sale after allowing for the proportion of the total purchase price required
to be paid in actual cash. The Secured Party is authorized at any sale or
other disposition of the Pledged Securities, if it deems it advisable so to
do, to restrict the prospective bidders or purchasers to persons who will
represent and agree that they are purchasing for their own account for
investment, and not with a view to the distribution or resale of any of the
Pledged Securities.
-4-
<PAGE>
(i) The Pledgor covenants that it will not at any time insist upon or
plead, or in any manner whatever claim or take any benefit or advantage of,
any stay or extension law now or at any time hereafter in force, nor claim,
take, nor insist upon any benefit or advantage of or from any law now or
hereafter in force providing for the valuation or appraisement of the
Pledged Securities or any part thereof, prior to any sale or sales thereof
to be made pursuant to any provision herein contained, or to the decree,
judgment or order of any court of competent jurisdiction; nor, after such
sale or sales, claim or exercise any right under any statute now or
hereafter made or enacted by any state or otherwise to redeem the property
so sold or any part thereof, and hereby expressly waives for itself and on
behalf of each and every person, except decree or judgment creditors of the
Pledgor acquiring any interest in or title to this Agreement, all benefit
and advantage of such law or laws, and covenants that it will not invoke or
utilizes any such law or laws or otherwise hinder, delay or impede the
execution of any power herein granted and delegated to the Secured Party,
but will suffer and permit the execution of every such power as though no
such law or laws have been made or enacted. Any sale, whether under any
power of sale hereby given or by virtue of judicial proceedings, shall
operate to divest all right, title, interest, claim and demand whatsoever,
either at law or in equity, of the Pledgor in and to the property sold and
shall be a perpetual bar, both at law and in equity, against the Pledgor,
its successors and assigns, and against any and all persons claiming the
property sold or any part thereof under, by or through the Pledgor, its
successors and assigns.
(j) The purchase money proceeds and/or avails of any sale of the
Pledged Securities, or any part thereof, and the proceeds and the avails of
any remedy hereunder shall be paid to and applied as follows:
(1) To the payment of reasonable costs and expenses of
foreclosure or suit, if any, and of such sale, and of all proper
expenses, liabilities and advances incurred or made hereunder by the
Secured Party, including without limitation all court costs and
attorneys' fees, and of all taxes, assessments or liens superior to
the lien of the Secured Party, except any taxes, assessments or other
superior lien subject to which sale may have been made;
(2) To the payment to the holders of the Note of the amount then
owing or unpaid on the Note for principal and interest, and in case
any such proceeds shall be insufficient to pay the whole amount so due
upon the Note then firstly to the payment of all interest then owing
and unpaid and secondly to the payment of all installments of
principal then owing and unpaid on the Note, without preference or
priority of any portion or installment of the Note over any other,
ratably in proportion to the aggregate of such installments of
principal; and
(3) To the payment of the surplus, if any, to the Pledgor, its
successor and assign, or to whomever may be lawfully entitled to
receiver the same.
-5-
<PAGE>
(k) In case the Secured Party shall have proceeded to enforce any
right under this Agreement by foreclosure, sale, entry or otherwise, and
such proceedings shall have been discontinued or abandoned for any reason
or shall have been determined adversely, then and in every such case the
Pledgor and the Secured Party shall be restored to their former positions
and rights hereunder with respect to the Pledged Securities.
(l) No delay or omission of the Secured Party to exercise any right or
power arising from any default on the part of the Pledgors shall exhaust or
impair any such right or power or prevent its exercise during the
continuance of such default. No waiver by the Secured Party of any such
default, whether such waiver be full or partial, shall extend to or be
taken to affect any subsequent default, or to impair the rights resulting
therefrom, except as may be otherwise provided herein. No remedy hereunder
is intended to be exclusive of any other remedy but each and every remedy
shall be cumulative and in addition to any and every other remedy given
hereunder or otherwise existing; nor shall the giving, taking or
enforcement of any other or additional security, collateral or guaranty for
the payment of the indebtedness secured under this Agreement operate to
prejudice, waive or affect the security of this Agreement or any rights,
powers or remedies hereunder; nor shall the Secured Party or the holder of
any of the indebtedness hereby secured be required to first look to,
enforce or exhaust such other or additional security, collateral or
guaranties or to take any action against the Pledgor.
(m) This Agreement and the Pledge provided for hereunder shall be
absolute and unconditional, irrespective of the regularity, validity or
enforceability of the Note, and shall not be affected or impaired by any
compromise, release, renewal, extension, indulgence, alteration, change in,
or modification of the Note, nor by any failure, negligence or omission on
the part of the Secured Party to realize upon or protect any of said
indebtedness. There shall be no obligation on the part of the Secured Party
at any time to resort to any other collateral security, property, rights or
remedies whatsoever, and the Secured Party shall have the right to enforce
this Agreement irrespective of whether or not other proceedings or steps
are pending seeking resort to, or realization for or upon, any of the
foregoing. No act of commission or omission of any kind or at any time on
the part of the Secured Party in respect to any matter whatsoever shall in
any way affect or impair this Agreement.
(n) The satisfaction or performance of any part of the indebtedness
secured hereby shall not affect the security hereby afforded or intended to
be afforded for any other indebtedness secured hereby; but the Pledge
hereby made shall at all times remain in full force and effect for the
benefit of all indebtedness secured hereby until all such indebtedness is
fully paid and satisfied or cancelled in accordance with the terms and
conditions thereof.
(o) The Pledgor will do, exercise, acknowledge and deliver all and
every further acts, deeds, conveyances, transfers and assurances necessary
or proper for the better assuring, conveying, assigning and confirming of
the security interest of the Secured Party in the Pledged Securities.
Without limiting the foregoing, the Pledgor covenants and agrees that it
will cause this Agreement and all agreements supplemental hereto and all
-6-
<PAGE>
financing statements, continuation statements, renewal affidavits and
notices required by applicable law at all times to be kept recorded and
filed at its own expense in such manner and in such places as may be
required by law in order fully to preserve and protect the perfection and
priority of the security interest herein granted and the rights of the
Secured Party hereunder.
(p) All communications provided for herein shall be in writing and
shall be deemed to have been given (unless otherwise required by the
specific provision hereof in respect of any matter) when delivered
personally or when deposited in the United States mail, registered, postage
prepaid, addressed as follows:
If to the Pledgor:
Fronteer Financial Holdings, Ltd., f/k/a
Fourteen Directory Company, Inc.
Norwest Center
1700 Lincoln Street, 32nd Floor
Denver, Colorado 80203
Attention: Dennis W. Olson, President
If to the Secured Party:
MultiSource Services, Inc.
c/o Oppenheimer Funds, Inc.
Two World Trade Center -- 34th Floor
New York, New York 10048-0669
Attention: Andrew J. Donohue, Esq.,
Executive Vice President and General Counsel
or as to the Pledgor or the Secured Party at such other address as the Pledgor
or the Secured Party may designate by notice duly given in accordance with this
paragraph to the other party.
(q) This Agreement may not be amended or changed except in writing
signed by the Pledgor and the Secured Party. This Agreement shall be
binding upon the Pledgor and their successors and assigns and shall inure
to the benefit of the Secured Party and its successors and assigns,
including each and every subsequent holder or holders of the Note. Without
limiting the foregoing, the Secured Party may, without any notice
whatsoever to anyone, sell, assign or transfer the Note or any part or
parts thereof and any immediate and successive assignee, transferee or
holder of the Note or any part or parts thereto shall have full right to
enforce this Agreement and to have and retain the Pledged Securities
subject hereto for the purposes herein set forth.
-7-
<PAGE>
(r) Upon the full and complete payment to the Secured Party of the
indebtedness secured by this Agreement or the full and complete
cancellation of such indebtedness in accordance with the terms and
conditions of the Note, the Secured Party shall release and deliver to the
Pledgor the Pledged Securities, including all stock powers, instruments and
other property then held by the Secured Party pursuant to this Agreement.
-8-
<PAGE>
IN WITNESS WHEREOF, the Pledgor has executed this Agreement as of the 23
day of July, 1996.
PLEDGOR:
FRONTEER FINANCIAL HOLDINGS, LTD.,
F/K/A FRONTEER DIRECTORY
COMPANY, INC.
By /s/ R. A. Fitzner, Jr.
-------------------------------------
R.A. Fitzner, Jr.,
Chairman of the Board
SECURED PARTY:
MULTISOURCE SERVICES, INC.
By /s/ Andrew J. Donohue
------------------------------------
Andrew J. Donohue, Executive Vice
President
<PAGE>
ANNEX A
TO PLEDGE AGREEMENT
SECURITIES OF SECUTRON CORP.:
63,046,105 shares of the Common Stock $.0005, par
value of Secutron Corp., a Colorado corporation,
representing 60.5% of the issued and outstanding
shares of capital stock of such corporation
represented by Certificate No. 109, dated April
26, 1995 issued in the name of Fronteer and
Certificate No. 112 for 12,566,594 shares dated
January 22, 1996, issued in the name of Fronteer.
SECURITIES OF MULTISOURCE SERVICES, INC.:
200 shares of the Common Stock of MultiSource
Services, Inc., a Colorado corporation,
representing 20% of the issued and outstanding
shares of capital stock of such corporation
represented by Certificate No. 1, dated July 23,
1996 issued in the name of Fronteer.
<PAGE>
SHAREHOLDERS AGREEMENT
(the "Agreement")
July 23, 1996
Fronteer Financial Holdings, Ltd., f/k/a
Fronteer Directory Company, Inc.
One Norwest Center
1700 Lincoln Street, 32nd Floor
Denver, Colorado 80203
The undersigned, MULTISOURCE SERVICES, Inc., a corporation organized under
the laws of Colorado (the "Company"), confirms its agreement with you (herein
sometimes referred to as the "Shareholder") as follows:
1. Restriction on Transfer of Company Shares. You agree not to sell,
assign, pledge, or otherwise transfer or encumber in any manner by any means
whatever any shares of the Company's stock which you now own or which you may
hereafter acquire including any shares which you may acquire pursuant to Section
11 hereof (the "Shares") except (i) in compliance with the terms of this
Agreement, (ii) upon the prior written consent of the Company's Board of
Directors, or (iii) any pledge of such Shares to the Company. You further agree
that the shares may not be transferred except in compliance with applicable
federal and state securities laws and you have executed a separate Investment
Letter with respect thereto (the "Investment Letter").
2. Purchase Option Upon Voluntary Transfer. If you intend to transfer any
Shares pursuant to an arm's-length bona fide offer to purchase for money
consideration, you shall deliver written notice of such intended transfer to the
Company at least 90 days prior to the consummation of such transaction, said
notice to specify (i) the number of Shares to be transferred, (ii) the address
of the proposed transferee, and (iii) the amount of the consideration and the
other terms of sale. Upon the receipt of such notice, the Company shall have the
prior right and option, exercisable at any time within the above-mentioned
90-day period, by the delivery of written notice of option exercise to you, to
purchase from you the Shares intended to be transferred by you.
3. Purchase Option Upon Involuntary Transfer. If, any of your Shares (or
your right to control and dispose of the same) are transferred by operation of
law to any person other than the Company (including, but not limited to, a
trustee in bankruptcy, a purchaser at any creditor's or court sale, or a
guardian or conservator), the Company shall have the right and option,
exercisable at any time within 90 days of the Company's receipt of actual notice
of such transfer, by the delivery of written notice of option exercise to you
and to your transferee, to purchase the Shares so transferred.
EXHIBIT G
<PAGE>
4. Purchase Option Upon Change in Control. As used herein the term "change
in control" shall mean (a) the Shareholder, ceasing to own 100% of the issued
and outstanding voting and equity securities of the RAF Financial Corporation, a
Colorado corporation ("RAF") or (b):
(i) a business combination, including a merger or consolidation, of
the Shareholder and the shareholders of the Shareholder prior to the
combination do not continue to own, directly or indirectly, more than
fifty-one percent (51%) of the equity of the combined entity;
(ii) the liquidation of the Shareholder; or
(iii) one or more transactions which result in the acquisition by any
person or associated group of persons (other than the Shareholder, any
employee benefit plan whose beneficiaries are employees of the Shareholder
or any of its subsidiaries of the beneficial ownership (as defined in Rule
13d-3 of the Exchange Act, in effect as of the date hereof) of forty
percent (40%) or more of the common stock of the Shareholder.
In the event of a change in control, the Company shall have the right and
option, exercisable at any time following the change in control by the delivery
of written notice of option exercise to you to purchase from you all Shares then
owned by you.
5. Purchase Option After July 23, 2001. The Company shall have the right
and option, exercisable at any time after July 23, 2001, by the delivery of
written notice of option exercise to you to purchase from you all Shares then
owned by you.
6. Purchase Price. The purchase price of Shares shall be determined and
paid in accordance with the provisions of Exhibit A attached hereto and hereby
made a part hereof.
7. Closing. Unless otherwise agreed, the closing of any purchase and sale
of Shares hereunder shall take place at the principal office of the Company in
Colorado. The closing shall be held at a time and date designated by the Company
within 60 days after the delivery to you by the Company of written notice of
option exercise. The closing may be delayed beyond such 60 day period for up to
an additional thirty (30) days if necessary to obtain the determination of the
Fair Value in accordance with the provisions of Exhibit A attached hereto.
8. Legend on Certificates. Each certificate representing Shares now or
hereafter owned by you shall bear the following legend:
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<PAGE>
"The shares of stock represented by this
Certificate are subject to, and are transferable
only upon compliance with, the provisions of the
Shareholders Agreement, as the same may be amended
from time to time, by and between the Company and
the registered holder hereof, a copy of which is
on file in the office of the Secretary of the
Company (the "Agreement").The Agreement provides,
among other things, for certain obligations to
sell the shares of stock represented by this
certificate for a designated purchase price upon
the events described therein."
9. Termination. This Agreement and all restrictions on the transfer of
Shares created hereby shall terminate upon the execution of a written agreement
by and between you and the Company providing for such termination.
10. Effect on Non-Exercise of Certain Options. If the purchase options
provided for in Sections 2 or 3 hereof are not exercised, then:
(a) In the case of a proposed voluntary transfer under Section 2
hereof, the Shares may be transferred by you within 30 days after the
expiration of the 90-day option period referred to therein to the
transferee named in the written notice from you required by Section 2 and
upon the terms and for the consideration stated in your written notice;
provided, however, that prior to such transfer the transferee shall execute
and deliver a written agreement in a form acceptable to the Company
agreeing to be bound by the terms and conditions of this Agreement and
provided that any such transfer must be in compliance with the Investment
Letter;
(b) In the case of an involuntary transfer under Section 3 hereof, the
Shares may be held by the transferee thereof after the expiration of the
90-day option period referred to therein; provided, however, that the
Shares shall remain subject to the terms and conditions of this Agreement
and the transferee shall upon request of the Company execute and deliver a
written agreement in a form acceptable to the Company confirming its
agreement to be bound by the terms and conditions of this Agreement.
In the event that you should acquire any Shares transferred by you to a
transferee under Section 2 or 3 hereof, such Shares shall again be subject to
the terms of this Agreement.
11. Preemptive Right and Option. The Company hereby grants to you, so long
as you own any Shares, and the Company hereby grants to any transferee of Shares
permitted under Section 2 hereof, so long as such transferee owns any of the
Shares, the following preemptive right and option:
-3-
<PAGE>
(a) If the Company proposes to issue any unissued shares of the
Company's stock, you and each such transferee shall have the right and
option to purchase from the Company, your and each such transferee's
Ownership Percentage, as hereinafter defined, of such shares which are
proposed to be issued by the Company. The term "Ownership Percentage" shall
mean the respective percentage of the Company's outstanding stock at the
time of each such proposed issuance which is represented by the Shares
owned by you and which is owned by each such transferee respectively at the
time of such proposed issuance.
(b) The preemptive right and option being granted by the Company to
you and to each such transferee shall be only the right and option to
acquire shares under the same terms and conditions as the Company proposes
to offer such shares. If the Company proposes to issue shares of Company
stock for a consideration which is other than cash, then the purchase price
of shares under the preemptive right and option granted in this Section 11
shall be the cash equivalent of such noncash consideration as determined by
the Board of Directors of the Company. The preemptive right and option must
be exercised within ten (10) business days after the Company gives written
notice of the proposed issuance, including the number of shares which are
subject to the preemptive right and option and the cash purchase price
therefore. If the preemptive right and option is not exercised by written
notice of acceptance to the Company within such ten (10) day period, it
shall terminate as to the proposed issuance, but shall continue to apply to
any new proposed issuance.
(c) The preemptive right and option under this Section 11 shall not,
under any circumstances, exist with respect to unissued shares proposed to
be issued by the Company to directors, officers, or employees pursuant to
approval by the affirmative vote of the holders of a majority of the then
outstanding shares of the Company's stock or when authorized by and not
inconsistent with a plan theretofore approved by such a vote of
shareholders.
12. Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
delivered, telegraphed or mailed by certified or registered mail, charges
prepaid,
(a) if to the Company, to:
MultiSource Services, Inc.
c/o Oppenheimer Funds, Inc.
Two World Trade Center -- 34th Floor
New York, New York 10048-0669
Attention: Andrew Donohue, Esq.,
Executive Vice President and General Counsel
(b) if to you, to you at your last address appearing on the books of
the Company;
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<PAGE>
(c) if to any other party, to the party entitled thereto at the last
known address of such party;
or to such other address or addresses as you or the Company shall
communicate in writing to the other.
13. Assignment of Purchase Options by Company. It is agreed that the
Company may assign to any third party or parties including any other shareholder
of the Company in whole or in part its purchase options under this Agreement.
14. Election of Director Nominee. So long as you continue to hold fifty-one
percent (51%) the Shares which you hold on the date hereof, the Company will, at
your request, cause one nominee named by you to be appointed or elected as a
director of the Company, provided, however, that such nominee shall be
reasonably satisfactory to the Company and shall be duly qualified to serve in
such capacity in accordance with all laws, rules and regulations applicable to
the Company's business.
15. Partial Invalidity. If any term or provision of this Agreement, or the
application thereof to any person or circumstance, shall to any extent be
invalid or unenforceable, as finally determined by a court of competent
jurisdiction, the remainder of this Agreement or the application of such term or
provisions to persons or circumstances other than those as to which it is
invalid or unenforceable, shall not be affected thereby, and each term and
provision of this Agreement shall be valid and enforced to the fullest extent
permitted by law.
16. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Colorado.
17. Amendment. This Agreement can be amended or modified from time to time
only by a written instrument signed by you and a duly authorized officer of the
Company.
18. Remedies for Breach. The Shares are unique property and the Company
shall have the remedies which are available to it for the violation of any of
the terms of this Agreement, including, but not limited to, the equitable remedy
of specific performance.
19. Effect of Termination. The termination of this Agreement for any reason
shall not affect any right or remedy existing hereunder prior to the effective
date of the termination hereof.
20. Binding Effect. This Agreement is binding upon and inures to the
benefit of the Company, its successors and assigns, and to you, and your
successors and assigns.
-5-
<PAGE>
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company the enclosed copy of this Agreement,
whereupon it shall become a binding agreement between us.
MULTISOURCE SERVICES, INC.
By /s/ Mark S. Vandekey
---------------------------
Mark S. Vandekey, President
The foregoing is hereby
confirmed and agreed to as of
the date first above written.
FRONTEER FINANCIAL
HOLDINGS, LTD., f/k/a
FRONTEER DIRECTORY
COMPANY, INC.
By /s/ R. A. Fitzner, Jr.
-------------------------------
R.A. Fitzner, Jr.,
Chairman of the Board
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<PAGE>
EXHIBIT A
TO SHAREHOLDERS AGREEMENT
(THE "AGREEMENT")
1. Determination of the Purchase Price.
1.1. Purchase Price. The purchase price of the Shares shall be in the case
of a purchase pursuant to Section 2 of the Agreement, the price set forth in the
bona fide offer. The purchase price of Shares shall be in the case of all other
purchases pursuant to the Agreement, the Fair Value of the Shares on the
Valuation Date, as hereinafter defined.
1.2. Fair Value. The term "Fair Value", as used in this Exhibit, shall mean
the fair market value of the Shares as determined by an independent appraiser
selected by the board of directors of the Company. In making its determination,
the appraiser shall base its appraisal on its estimate of the most likely
reasonable price which a willing buyer would pay a willing seller for the Shares
subject to purchase under the option, as of the Valuation Date, assuming that
neither was under compulsion to act and both were well informed of all relevant
facts. The determination of fair market value by such appraiser shall be set
forth in a written report which shall for all purposes, be final and binding on
the Company and the Shareholder. The Company shall bear all costs, expenses and
fees of the appraisal.
1.3. Valuation Date. The term "Valuation Date", as used in this Exhibit,
shall mean:
(a) In the case of a purchase under Section 3 of the Agreement the
last day of the month preceding the day which the Company received actual
notice of the transfer; and
(b) In the case of a purchase under Sections 4 or 5 of the Agreement
the last day of the month preceding the day which the Company delivered
written notice of option exercise.
2. Payment of Purchase Price. In all cases, the purchase price for Shares
shall be paid in cash at the closing.
3. Definitions. All terms used in this Exhibit have the meanings provided
in the Agreement unless otherwise expressly provided herein or unless a contrary
meaning is clearly indicated by the context in which the term is used.
The provisions set forth in this Exhibit are hereby expressly agreed to and
shall constitute part of the Agreement.
MULTISOURCE SERVICES, INC.
By /s/ Mark S. Vandekey
---------------------------
Mark S. Vandekey, President
Agreed to
FRONTEER FINANCIAL
HOLDINGS, LTD., f/k/a
FRONTEER DIRECTORY
COMPANY, INC.
By /s/ R. A. Fitzner, Jr.
--------------------------------
R.A. Fitzner, Jr.,
Chairman of the Board
<PAGE>
AGREEMENT NOT TO COMPETE
This Agreement is made and entered into as of July 23, 1996 by and among
FRONTEER FINANCIAL HOLDINGS, LTD., f/k/a FRONTEER DIRECTORY COMPANY, INC., a
Colorado corporation ("Fronteer") RAF FINANCIAL CORPORATION, a Colorado
corporation ("Seller") which is a wholly-owned subsidiary of Fronteer, and
MULTISOURCE SERVICES, INC., a Colorado corporation (the "Buyer").
WITNESSETH:
WHEREAS, Seller is engaged in the business of a registered broker-dealer
consisting of providing securities transaction clearing services for itself and
other broker-dealers on a fully disclosed basis (the "Clearing Business"),
providing securities brokerage and investment services, trading fixed income and
equity securities, providing investment banking services to corporate and
municipal clients, managing and participating in underwriting of corporate and
municipal securities, and distributing mutual fund shares (all such business,
including the Clearing Business, hereinafter referred to collectively as the
"Securities Business");
WHEREAS, Fronteer Seller and Buyer are parties to that certain Agreement
for Sale and Purchase of Certain of the Business and Assets of RAF Financial
Corporation, dated January 29, 1996 (the "Acquisition Agreement") pursuant to
which Buyer purchased the Clearing Business of Seller as going concern and
certain assets of Seller used in the Clearing Business;
WHEREAS, to accord Buyer the full value of its acquisition pursuant to the
Acquisition Agreement, one of the conditions to the consummation of the
transactions contemplated thereunder is the execution and delivery by Seller and
Fronteer of this Agreement in order to protect the Buyer's acquisition and
investment in the Clearing Business, including the good will thereof, and to
insure the continuity in the operation of the Clearing Business by Buyer;
NOW, THEREFORE, pursuant to the Acquisition Agreement and for the
consideration contained therein, and for other good and valuable consideration
in hand paid, the receipt, adequacy and sufficiency of which are hereby
acknowledged, it is hereby agreed as follows:
1. Restrictive Covenants; Injunctive Relief. (a) Fronteer and
Seller agree that, for the greater of (i) ten years following the date
hereof, or (ii) three years following the date on which Buyer ceases
to provide services of the Clearing Business for Seller pursuant to
that certain Clearing Agreement being entered into pursuant to the
Acquisition Agreement (the "Clearing Agreement"), they shall not,
without the prior written approval of the Board of Directors of Buyer,
directly or indirectly, or through any direct or indirect subsidiaries
or affiliates:
EXHIBIT K
<PAGE>
(i) Anywhere in continental United States, engage or
participate in, or render services in connection with, any
business enterprise where the activity to be engaged in may
reasonably be deemed competitive with the Clearing Business; or
(ii) Solicit, raid, entice or induce any employee of Buyer,
including any Clearing Employees, as defined in the Acquisition
Agreement, retained by Buyer, or of any of Buyer's direct or
indirect subsidiaries or affiliates to become employed by or
affiliated with any other business enterprise; or
(iii) Solicit any customer or supplier of goods or services
of the Buyer or any of its direct or indirect subsidiaries or
affiliates for the purpose of diverting such customer or supplier
from the Buyer or such subsidiaries or affiliates in connection
with the Clearing Business or reducing the amount of business
such customer or supplier does with Buyer and such subsidiaries
and affiliates in connection with the Clearing Business.
The foregoing restrictions in subparagraph 1(a)(i) hereof shall not be
construed to prevent Seller from providing the services of Clearing
Business solely on its own behalf, and not on behalf of any customers,
after the date Buyer ceases to provide the services of the Clearing
Business for Seller under the Clearing Agreement provided that such
activity does not violate of the terms or conditions contained in the
Clearing Agreement.
(b) Fronteer and Seller acknowledge that a breach by Fronteer or
Seller of the provisions of subparagraph 1(a) hereof will cause Buyer
irreparable injury and damage. If any court or arbitrator holds that the
whole or any part of the provisions of subparagraph 1(a) hereof is
unenforceable by reason of the extent, duration or geographic scope
thereof, or otherwise, then the court or arbitrator making such
determination shall have the right, and is hereby so requested by Buyer,
Fronteer and Seller, to reduce such extent, duration, geographic scope, or
other provisions thereof, and in its reduced form the provisions of
subparagraph 1(a) shall be enforceable in the manner contemplated hereby.
Furthermore, in the event of a breach of the provisions of subparagraph
1(a) hereof, Buyer shall be entitled to injunctive relief against Fronteer
and Seller in addition to such other rights as Buyer may have under this
Agreement at law or in equity. Buyer, Seller and Fronteer acknowledge that
the potential damage which would be suffered by Buyer in the event of a
breach of these restrictive covenants by Seller or Fronteer are difficult
to ascertain as of the date of this Agreement. Therefore, the parties
intend to provide a reasonable estimate of damages which is not greatly
disproportionate to the probable or presumed loss resulting from any such
breach. In the event of a breach of these restrictive covenants by Seller
or Fronteer, Buyer shall be entitled to receive either (1) liquidiated
damages in the amount of any fees or other compensation earned by Seller or
Fronteer as a result of each breach, or (2) its actual damages, at the
option of Buyer.
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<PAGE>
2. Trade Secrets and Confidential Information. Fronteer and Seller
shall not, either directly or indirectly, or through any direct or indirect
subsidiaries or affiliates, disclose or use at any time, any information of
a proprietary nature acquired by Buyer from Seller pursuant to the
Acquisition Agreement including, but not limited to, clearing customer
lists, records, data, formulae, documents, specifications, inventions,
processes, methods and intangible rights which is of a confidential
information or trade secret nature. Notwithstanding anything to the
contrary provided above, the restrictions in this Paragraph 2 shall not
apply to any information which (i) at the time of acquisition by Buyer is
in the public domain through no fault of the Fronteer or Seller, (ii)
becomes part of the public domain other than as a result of an act of
Fronteer or Seller, (iii) Fronteer or Seller are required to disclose
publicly in connection with enforcement of its rights hereunder, (vi) is
required by a governmental regulatory authority having jurisdiction over
Buyer, Fronteer or Seller or by a court of competent jurisdiction to be
disclosed, (v) consists of information relating to Seller's Securities
Business except for the Seller's Clearing Business. In the event Fronteer
or Seller receives notice of any regulatory or court proceeding which may
result in disclosure permitted under clause (vi) of this Paragraph 2,
Fronteer and Seller shall promptly notify Buyer and, if requested by Buyer,
cooperate in taking appropriate steps to defend against such disclosure.
3. Prior Agreements; Amendments. This Agreement contains the entire
understanding between the parties hereto with respect to the subject matter
hereof and supersedes any prior understanding between Buyer, Fronteer and
Seller.
4. Assignability and Binding Effect. This Agreement shall inure to the
benefit of and shall be binding upon Buyer and its successors and permitted
assigns and Fronteer and Seller and their successors and permitted assigns.
However, neither party may assign, transfer, pledge, encumber, hypothecate
or otherwise dispose of this Agreement or any of it rights hereunder
without the prior written consent of the other party (and, in the case of
any consent required from Buyer, prior written consent from the Board of
Directors of Buyer), and any such attempted assignment, transfer, pledge,
encumbrance, hypothecation or other disposition without such consent shall
be null and void and without effect. Notwithstanding the foregoing, Buyer
shall be entitled to assign this Agreement, without the prior written
consent of Fronteer and Seller, in connection with the merger or
consolidation of Buyer with another person or the sale of all or
substantially all of the assets and business of Buyer to another person.
Upon such consolidation, merger or transfer of assets and assumption, the
term "Buyer" as used herein shall mean such other person and this Agreement
shall continue in full force and effect.
5. Headings. The paragraph headings contained herein are included
solely for convenience of reference and shall not control or affect the
meaning or interpretation of any of the provisions of this Agreement.
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<PAGE>
6. Notices. Any notices or other communications hereunder by either
party shall be in writing and shall be deemed to have been duly given upon
delivery, if delivered personally to the other party, or five (5) business
days after deposit in a United States Postal Service Depository, if sent by
registered or certified mail, postage prepaid, return receipt requested, to
the other party at his or its address set forth at the beginning of this
Agreement or at such other address as such other party may designate in
conformity with the foregoing.
7. Waiver. The failure at any time of any party to demand strict
performance of another party of any of the terms, covenants or conditions
set forth in this Agreement shall not be construed as a continuing waiver
or relinquishment thereof, and any party may, at any time, demand strict
and complete performance of the other party of such terms, covenants and
conditions. Any written approval given by the Board of Directors of Buyer
under subparagraph 1(a) hereof permitting certain activities by Fronteer or
Seller shall be limited to those specific activities so identified therein
and shall not be construed as a general waiver of any of the terms,
covenants or conditions set forth in subparagraph 1(a) hereof.
8. Severability. The invalidity or unenforceability of any provision
of Agreement shall in no way affect the validity or enforceability of any
other provision of this Agreement.
9. Governing Law. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the State of Colorado
applicable to contracts made and to be performed therein, without giving
effect to the principles thereof relating to the conflict of laws.
FRONTEER FINANCIAL HOLDINGS, LTD., f/k/a
FRONTEER DIRECTORY COMPANY, INC.
By /s/ R. A. Fitzner, Jr.
--------------------------------------
Its Chairman of the Board
RAF FINANCIAL CORPORATION
By /s/ R. A. Fitzner, Jr.
--------------------------------------
Its President
MULTISOURCE SERVICES, INC.
By /s/ Andrew Donohue
--------------------------------------
Its Executive Vice President
-4-
<PAGE>
GUARANTY AGREEMENT
THIS AGREEMENT is made and entered into as of the 23rd day of July, 1996,
by and between FRONTEER FINANCIAL HOLDINGS, LTD., f/k/a FRONTEER DIRECTORY
COMPANY, INC. a Colorado corporation (hereinafter sometimes referred to as
"Fronteer") and MULTISOURCE, INC., a Colorado corporation ("MultiSource").
WITNESSETH:
WHEREAS, Fronteer and MultiSource are parties to that certain Agreement for
Sale and Purchase of the Certain Business and Assets of RAF Financial
Corporation dated as of January 29, 1996 pursuant to which MultiSource will
acquire certain of the assets of RAF Financial Corporation, a Colorado
corporation ("RAF"), a wholly-owned subsidiary of Fronteer (the "Acquisition
Agreement");
WHEREAS, pursuant to the Acquisition Agreement MultiSource will enter into
the following Agreements with Secutron Corp., a Colorado corporation
("Secutron"):
(i) The Master Software Development Agreement dated as of July
23, 1996;
(ii) The Software License Agreement dated July 23, 1996; and
(iii) The Facilities Management Agreement dated July 23, 1996.
(Such agreements, as the same may be amended from time to time between Secutron
and MultiSource, without further notice to or consent by Fronteer, hereinafter
referred to as the "Secutron Agreements").
WHEREAS, Fronteer owns 60.5% of the capital stock of Secutron and will
derive a substantial benefit from the Secutron Agreements;
WHEREAS, pursuant to the Acquisition Agreement MultiSource will enter that
certain Fully-Disclosed Correspondent Agreement with RAF the ("Clearing
Agreement") and Fronteer will derive a substantial benefit from the Clearing
Agreement (the Secutron Agreements and the Clearing Agreement hereinafter
sometimes referred to together as the "Guarantied Agreements");
WHEREAS, one of the conditions to the consummation of the transactions
under the Acquisition Agreement was the execution and delivery of this Guaranty
by Fronteer.
NOW, THEREFORE, in consideration of TEN DOLLARS ($10.00) and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged and confessed, and as an inducement to MultiSource to consummate
the acquisition under the Acquisition Agreement and to enter into the Guarantied
Agreements, the parties hereto hereby agree as follows:
EXHIBIT N
<PAGE>
1. Guaranty. Fronteer guarantees the full and prompt payment when due
of each and all of the amounts provided to be paid by Secutron and RAF to
MultiSource under the terms of the Guarantied Agreements and the full and
prompt performance and observance by Secutron and RAF of each and all of
the agreements and covenants required to be performed and observed by
Secutron and RAF under the terms of the Guarantied Agreements. Fronteer
further agrees to pay all expenses and charges, legal or otherwise, paid or
incurred by MultiSource in realizing upon any of the payments hereby
guaranteed or in enforcing this guaranty.
2. Absolute Obligation. The liability of Fronteer under this guaranty
shall be continuing, absolute and unconditional and, without limiting the
foregoing, shall not be affected or impaired by any act or omission on the
part of MultiSource, or of Secutron or RAF, or any of such persons, which
would either in law or in equity constitute a satisfaction, discharge or
termination of the liability of a surety or guarantor, including, but not
limited to, (i) any extension or change in the time, manner, place or terms
of any of the obligations or liabilities guaranteed hereunder, (ii) any
amendment, supplement, waiver or other modification of any of the terms of
any of the obligations or liabilities guaranteed hereunder, (iii) the
granting of any indulgence to Secutron or RAF, (iv) the settlement or
compromise of any of the obligations or liabilities guaranteed hereunder or
the subordination of the same to the claims of others, (v) the manner of
application of any payments received by MultiSource to the obligations of
Secutron or RAF, (vi) the failure to provide any notification to Fronteer
with respect to any default by Secutron or RAF, (vii) any bankruptcy,
insolvency, arrangement, reorganization, moratorium, receivership, or
similar proceeding affecting Secutron or RAF, and (viii) the release or
discharge of Secutron or RAF from the performance or observance of any of
the provisions of the Guarantied Agreements by operation of law. This
guaranty shall remain in full force and effect without respect to future
changes in conditions, including change in law, until MultiSource shall
have been indefeasibly paid in full all sums due from Secutron and RAF
described herein and until such sums are not subject to rescission or
repayment upon any bankruptcy, insolvency, arrangement, reorganization,
moratorium, receivership, or similar proceeding affecting Secutron or RAF.
3. Waiver of Defenses, etc. Fronteer shall not be entitled to and
hereby expressly waives any and all defenses available to sureties,
guarantors and other secondary parties either at law or in equity. Notice
to Fronteer of any default under the Guarantied Agreements or the
termination thereof or of the creation of any obligation or liability of
Secutron or RAF is hereby expressly waived. In addition, Fronteer waives
any claim or other right which Fronteer may now have or hereafter acquire
against Secutron or RAF or any other person that is primarily or
contingently liable on the guaranteed obligation that arises from the
existence of performance of Fronteer's obligations under this guaranty,
including, without limitation, any right of subrogation, reimbursement,
exoneration, contribution, indemnification, any right to participate in any
claim or remedy of MultiSource against Secutron or RAF, or any collateral
security therefor, which MultiSource now has or hereafter acquires; whether
or not such claim, remedy or right arises in equity, or under contract,
statute or common law. In order to hold Fronteer liable hereunder, there
shall be no obligation on the part of MultiSource at any time to resort for
payment to Secutron or RAF or to any other persons, their properties or
assets or to any security, property or other rights or remedies whatsoever,
and MultiSource shall have the right to enforce this guaranty whether or
not proceedings or steps are pending to realize upon any of the foregoing.
-2-
<PAGE>
4. Governing Law. This guaranty shall be governed by and construed in
accordance with the applicable laws of the State of Colorado.
5. Successors and Assigns. This guaranty and every part thereof shall
be binding upon Fronteer and the successors and assigns of Fronteer and
shall inure to the benefit of MultiSource and its successors and assigns.
6. Severability. In the event any provision of this guaranty shall be
held invalid or unenforceable by any court of competent jurisdiction, such
holding shall not invalidate or render unenforceable any other provision
hereof and the guarantor hereby waives any provision of law which renders
any provision hereof prohibited or unenforceable in any respect.
IN WITNESS WHEREOF, Fronteer has caused this instrument to be executed this
23rd day of July, 1996.
FRONTEER FINANCIAL HOLDINGS, LTD., f/k/a
FRONTEER DIRECTORY COMPANY, INC.
By /s/ R. A. Fitzner, Jr.
--------------------------------------
R.A. Fitzner, Jr.,
Chairman of the Board
-3-
STOCK SUBSCRIPTION AGREEMENT
This Agreement is made and entered into as of January 29, 1996 by and among
FRONTEER DIRECTORY COMPANY, INC. a Colorado corporation ("Fronteer"),
OPPENHEIMER FUNDS, INC., a Colorado corporation ("OFI") and MULTISOURCE
SERVICES, INC., a Colorado corporation (the "Company").
W I T N E S S E T H:
WHEREAS, Fronteer and OFI desire to organize the Company and initially
acquire 200 shares of the Common stock and 800 shares of the Common stock,
respectively, from the Company;
WHEREAS, the Company is being organized to consummate the transactions
under that certain Agreement for Sale and Purchase of Certain of the Business
and Assets of RAF Financial Corporation of even date herewith by and among
Fronteer, RAF Financial Corporation, a Colorado corporation ("Seller") which is
a wholly-owned subsidiary of Fronteer and the Company (the "Acquisition
Agreement");
NOW THEREFORE, in consideration of the premises and the mutual promises
herein set forth, it is hereby agreed as follows:
Section 1. Subscription. (a) Fronteer hereby subscribes for the purchase of
200 shares of the common stock of the Company to be represented by stock
certificate No. 1 to be issued in accordance with the terms and conditions set
forth in the Acquisition Agreement and for the consideration set forth in the
Acquisition Agreement upon the consummation of the Closing pursuant to the
Acquisition Agreement.
(b) OFI hereby subscribes for the purchase of 800 shares of the common
stock of the Company to be represented by stock certificate No. 2 to be issued
in accordance with the terms and conditions set forth in the Acquisition
Agreement and for the consideration set forth in the Acquisition Agreement upon
the consummation of the Closing pursuant to the Acquisition Agreement.
Section 2. Conditional Agreement. The obligations of the parties hereto are
subject to the satisfaction of all conditions under the Acquisition Agreement
and the consummation of the transactions under the Acquisition Agreement. This
Agreement shall terminate automatically upon any termination of the Acquisition
Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Stock Subscription
Agreement as of the year and date set forth above.
FRONTEER DIRECTORY COMPANY, INC.
By /s/ Dennis W. Olson
--------------------------------------
Dennis W. Olson, President
OPPENHEIMER FUNDS, INC.
By /s/ Kenneth C. Early
--------------------------------------
Kenneth C. Early,
Executive Vice President
MULTISOURCE SERVICES, INC.
By /s/ Kenneth C. Early
--------------------------------------
Kenneth C. Early
Chief Executive officer
