CONFORMED COPY
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of August 11, 2000 (this
"AGREEMENT"), by and among MAXCOR FINANCIAL GROUP INC., a Delaware corporation
(the "BUYER"), and all of the stockholders of TRADESOFT TECHNOLOGIES, INC., a
Delaware corporation (the "COMPANY"), whose names, addresses and holdings in the
Company are set forth on SCHEDULE 1 hereto (individually, a "SELLER" and,
collectively, the "SELLERS"; the Buyer and the Sellers are referred to herein
sometimes individually as a "PARTY" and collectively as the "PARTIES") .
WHEREAS, the Sellers are the beneficial and record owners of an aggregate
of two thousand shares ("SHARES") of the common stock, without par value
("COMMON STOCK"), of the Company, which Shares represent all of the issued and
outstanding shares of capital stock of the Company;
WHEREAS, the Sellers desire to sell, and the Buyer desires to purchase,
the Shares on the terms and conditions set forth herein (the "ACQUISITION");
WHEREAS, two of the Sellers, John P. Bunch ("BUNCH") and Daniel A. White
("WHITE"), each holds a promissory note of the Company in the principal amount
of sixty thousand dollars ($60,000) (together with any accrued and unpaid
interest thereon, each a "NOTE" and, together, the "NOTES") and, in connection
with his sale of the Shares owned by him, desires to be made whole on the Note
held by him;
NOW, THEREFORE, in consideration of the premises, the mutual covenants and
agreements of the Parties, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Parties hereby
agree as follows:
ARTICLE I.
PURCHASE AND SALE; CLOSING
1.01. PURCHASE AND SALE OF SHARES. Upon the terms and subject to the
conditions of this Agreement, at the Closing (as hereinafter defined), each of
the Sellers agrees to sell, transfer, assign and deliver to the Buyer, free and
clear of all liens, security interests, pledges, voting agreements, claims,
options and encumbrances of every kind, character and description whatsoever
("LIENS"), and the Buyer agrees to purchase from such Seller, the number of
Shares set forth opposite such Seller's name on Schedule 1. The aggregate
consideration for the purchase of all of the Shares shall consist of (i) one
million, thirty-five thousand dollars ($1,035,000) in cash (the "CASH
CONSIDERATION") and (ii) an aggregate of one million (1,000,000) fully-paid and
nonassessable shares of the common stock, par value $.001 ("BUYER COMMON
STOCK"), of the Buyer (the "SHARE CONSIDERATION"). Each Seller shall be entitled
to receive a pro rata portion of the Cash Consideration and the Share
Consideration, based on his percentage ownership of the Shares ("PRO RATA
PERCENTAGE"). It is understood that the Pro Rata Percentages of White and Bunch
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are thirty-seven and one-half percent (37-1/2%) and the Pro Rata Percentage of
the other Seller, Robert McCully ("MCCULLY"), is twenty-five percent (25%).
1.02. CASH ELECTION. Each Seller is entitled, with respect to his Pro Rata
Percentage of the Share Consideration, to elect a cash alternative (the "CASH
ELECTION OPTION"), pursuant to which he will receive, in lieu of all of the
shares of the Buyer Common Stock otherwise receivable by him in the Acquisition,
a cash amount (the "CASH ALTERNATIVE CONSIDERATION") equal to the product of (i)
the number of shares of the Buyer Common Stock otherwise receivable by him in
the Acquisition and (ii) one and six hundred sixty-seven one thousandths dollars
($1.667). White hereby irrevocably agrees that he is not electing the Cash
Election Option for his portion of the Share Consideration (and, therefore, will
receive both the Cash Consideration and the Share Consideration in the
Acquisition). Bunch hereby irrevocably confirms that he is electing the Cash
Election Option for his portion of the Share Consideration (and, therefore, will
receive solely the Cash Consideration and the Cash Alternative Consideration in
the Acquisition). McCully hereby irrevocably confirms that he is electing the
Cash Election Option for his portion of the Share Consideration (and, therefore,
will receive solely the Cash Consideration and the Cash Alternative
Consideration in the Acquisition). Taking into account the Cash Election
Options, SCHEDULE 2 sets forth opposite each Seller's name the Cash
Consideration and the Share Consideration or the Cash Alternative Consideration,
as the case may be (collectively, the "Consideration"), allocable in the
Acquisition to such Seller, which, subject to the withholdings and offsets
provided for in Sections 1.04, 1.05 and 1.09, shall be paid as provided in
Section 1.06 hereof.
1.03. PURCHASE AND SALE OF THE NOTES. Upon the terms and subject to the
conditions of this Agreement, at the Closing, White and Bunch each agrees to
sell, transfer, assign and deliver to the Buyer, free and clear of all Liens,
the Note held by him. The aggregate consideration for the purchase of each Note
shall consist of sixty thousand dollars ($60,000) in cash, less, in the case of
Bunch, nine thousand six hundred and ninety dollars ($9,690) owed by him to the
Company (the "NOTE CONSIDERATION"), and shall be paid as provided in Section
1.06 hereof.
1.04. RELEASE OF GUARANTIES. At the Closing, the Buyer shall cancel and
redeliver to the Sellers the two separate personal guaranties made by White, in
the case of one of the guaranties, and by White and Bunch, in the case of the
other of the guaranties, with respect to certain obligations of the Company to
the Buyer, each dated July 25, 2000 (the "GUARANTIES"), in exchange for
offsetting from the Cash Consideration otherwise payable to each Seller, in
accordance with the Pro Rata Percentages and as provided in Section 1.06 hereof,
the amount set forth opposite each Seller's name on SCHEDULE 3 as a guaranty
release payment (each, a "GUARANTY RELEASE PAYMENT").
1.05. CERTAIN LEGAL FEES. At the Closing, the aggregate legal fees
incurred by law firms representing the Sellers in connection with the
Acquisition, as set forth on SCHEDULE 4 (the "TRANSACTION FEES"), will be (i)
withheld from the aggregate Cash Consideration by offsetting from the Cash
Consideration otherwise payable to each Seller, in accordance with the Pro Rata
Percentages and as provided in Section 1.06 hereof, the amount set forth
opposite such Seller's name on Schedule 3 and (ii) (x) all but ten thousand
dollars ($10,000) of the portion of the Transaction Fees set forth on Schedule 4
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opposite the name of the law firm Esanu Katsky Korins & Siger, LLP ("EKKS")
shall be paid directly by the Buyer to the escrow account of EKKS, as listed on
Schedule 1 (the "EKKS ACCOUNT"), (y) such ten thousand dollars ($10,000) portion
of such Transaction Fees shall be retained by the Buyer as reimbursement of
amounts already paid by the Company to EKKS and (z) the portion of the
Transaction Fees set forth on Schedule 4 opposite the name of the attorney
Jonathan B. Lapin, Esq. ("LAPIN") shall be paid directly by the Buyer to the
escrow account of Lapin, as listed on Schedule 1 (the "LAPIN ACCOUNT"). In
addition, the portion of the Legal Fees (as defined) which is the responsibility
of the Sellers pursuant to Section 5.01 of this Agreement will be (x) withheld
from the aggregate Cash Consideration by offsetting, as provided in Section 1.06
hereof, equally from the Cash Consideration otherwise payable to each of White
and Bunch the amount set forth opposite each of their names on Schedule 3 and
(y) retained by the Buyer for application by it or the Company, post-Closing, to
settlement of such portion of the Legal Fees.
1.06. CLOSING. The closing (the "CLOSING") of the purchase and sale of the
Shares and the Notes hereunder shall take place at the offices of the Buyer, at
2 World Trade Center, 84th floor, New York, New York 10048, concurrently with
the execution of this Agreement by the Parties (the time and date of the Closing
being hereinafter called the "CLOSING DATE"). At the Closing:
(a) the Buyer shall cause a wire transfer or transfers of immediately
available funds, to such account of each of the Sellers as is set forth opposite
such Seller's name on Schedule 1 (the "ACCOUNTS"), in the respective amounts set
forth opposite such Seller's name on SCHEDULE 5, calculated as follows: (i) (x)
the portion of the Cash Consideration allocable to such Seller plus (y) in the
case of Bunch and McCully, the amount of the Cash Alternative Consideration to
which each is entitled, in each case as set forth in detail on Schedule 2, minus
(ii) (x) in the case of Bunch and McCully, his respective portion of the Cash
Escrow Amount to be placed in escrow under the Escrow Agreement (as each is
defined), plus (y) in the case of White and Bunch, his respective portion of the
Legal Fees plus (z) in the case of each Seller, his respective portion of the
Transaction Fees and his respective Guaranty Release Payment, in each case as
set forth in detail on Schedule 3;
(b) the Buyer shall deliver to White a certificate or certificates
issued in his name and representing the number of shares of the Buyer Common
Stock allocable to him as his portion of the Share Consideration, as set forth
on Schedule 2, less the Share Escrow Amount (as defined) to be placed in escrow
under the Escrow Agreement (the "BUYER SHARE CERTIFICATES");
(c) the Sellers shall deliver to the Buyer all certificates
representing the Shares, duly endorsed for transfer or accompanied by stock
powers duly endorsed in blank (the "SELLER SHARE CERTIFICATES");
(d) each of White and Bunch shall deliver to the Buyer the respective
Note held by him, in each case accompanied by an appropriate letter of
assignment;
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(e) the Buyer shall cause a wire transfer or transfers of immediately
available funds, to the respective Accounts of each of White and Bunch, in the
amount of (x) the Note Consideration payable to each of White and Bunch, as set
forth on Schedule 2, and (y) in the case of Bunch, the Deferred Salary
Obligation (as defined);
(f) each Seller shall deliver to the Buyer a certification, in the form
heretofore agreed, as to non-foreign status in accordance with Section 1445 of
the Code (as defined) and the applicable U.S. Treasury regulations thereunder.
(g) the Buyer shall receive a copy of the White Employment Agreement
(as defined), as executed prior to the Closing by each of White and the Company;
(h) in connection with the White Employment Agreement: (i) the Buyer
shall cause a wire transfer of immediately available funds, to the Account of
White, in the amount of the Loan (as defined) and the Second Loan (as defined)
and (ii) White shall execute and deliver to the Buyer or the Company, as
specified by the Buyer, the Loan Note (as defined) and the Second Loan Note (as
defined);
(i) the Buyer shall receive (x) a copy of the Bunch Non-Compete
Agreement (as defined), as executed prior to the Closing by each of Bunch and
the Company, and (y) a copy of the McCully Non-Compete Agreement (as defined),
as executed on or prior to the Closing by each of McCully and the Company;
(j) the Buyer shall receive a copy of each of the Other Employment
Agreements (as defined), as executed prior to the Closing by the Company and
each of the other parties thereto;
(k) each Seller and the Company shall execute and deliver to each other
the Mutual Release (as defined);
(l) each Seller and Consultant (as defined) shall execute and deliver
to the Company the Agreement as to Rights (as defined);
(m) each Seller shall execute and deliver to the Company the Assumption
Agreement (as defined);
(n) the Company shall cause its Secretary to execute and deliver to the
Buyer a certificate (x) attaching and attesting to the resolutions of the
Company's Board of Directors and of the Company's stockholders in connection
with the Acquisition and (y) attesting to such other matters in connection with
the Acquisition as the Buyer may reasonably request;
(o) the Company shall deliver, or cause to be delivered, to the Buyer
the resignations, effective as of the Closing, of each member of its Board of
Directors;
(p) the Buyer shall receive from EKKS an opinion substantially in the
form heretofore agreed, addressed to the Buyer and dated as of the Closing Date;
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(q) the Buyer shall cause a wire transfer of immediately available
funds (x) to the EKKS Account in the amount set forth as a Transaction Fee
opposite EKKS's name on Schedule 5 and (y) to the Lapin Account in the amount
set forth as a Transaction Fee opposite Lapin's name on Schedule 5;
(r) the Company shall deliver the Source Code (as defined); and
(s) the Buyer and each Seller shall execute and deliver to each other
the Escrow Agreement (as defined). Except as otherwise provided in this
Agreement, this Agreement, the Escrow Agreement, the Agreement as to Rights, the
Assumption Agreement, the Mutual Release, the Other Employment Agreements, the
Non-Compete Agreements (as defined), the White Employment Agreement, the Loan
Note, the Second Loan Note, the Restricted Stock Grant (as defined), the
Restricted Share Note (as defined) and each other agreement, certificate or
instrument delivered by any of the Buyer, the Sellers or the Company at or in
connection with the Closing in connection with the Acquisition are hereinafter
referred to as the "ACQUISITION AGREEMENTS."
1.07. COMPANY RECAPITALIZATION. Promptly following the Closing, either
on the Closing Date or the next business day thereafter, the Buyer shall
approve, and cause the Company to approve and file with the Secretary of State
of the State of Delaware, the Certificate of Amendment, substantially in the
form attached hereto as EXHIBIT A, to the Company's Certificate of Incorporation
(the "RECAPITALIZATION").
1.08. RESTRICTED STOCK GRANT. Promptly following the Recapitalization,
either on the Closing Date or the next business day thereafter, (i) the Buyer
shall cause the Company (x) to execute and deliver to White the Restricted Stock
Grant and (y) to issue and deliver to White a certificate or certificates
representing the Restricted Shares (as defined), and (ii) White shall (w)
execute and deliver to the Company the Restricted Stock Grant, (x) pay to the
Company the cash portion of the purchase price for the Restricted Shares, as set
forth in the Restricted Stock Grant, (y) execute and deliver to the Company the
Restricted Share Note and (z) execute and deliver to the Company a Section 83(b)
election under the Code (as defined) with respect to the Restricted Shares.
1.09. ESCROW. (a) At or immediately prior to the Closing, each of the
Sellers, the Buyer and Continental Stock Transfer & Trust Company, as escrow
agent (the "ESCROW AGENT"), will enter into an escrow agreement substantially in
the form attached hereto as EXHIBIT B (the "ESCROW AGREEMENT"). At the Closing
the Buyer will withhold from the Consideration otherwise payable to the Sellers,
as provided in Section 1.06, (x) a cash amount equal to ten percent (10%) of the
aggregate Cash Consideration and Cash Alternative Consideration receivable by
Bunch and McCully, as set forth on Schedule 3 (the "CASH ESCROW AMOUNT"), and
(y) a certificate or certificates, made out in the name of White, representing
sixty thousand, seven hundred eighty-three (60,783) shares of Buyer Common Stock
(the "SHARE ESCROW AMOUNT" and, together with the Cash Escrow Amount, the
"ESCROW AMOUNT"). At the Closing White shall deliver to the Buyer a stock power,
duly executed by him, with the signature medallion guaranteed, with respect to
the Share Escrow Amount. As soon as practicable thereafter the Buyer shall
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deliver or cause to be delivered to the Escrow Agent both the Escrow Amount and
such stock power, for holding by the Escrow Agent in accordance with the terms
of the Escrow Agreement.
(b) The Escrow Agreement shall provide, among other things, for the
establishment and maintenance of subaccounts with respect to each Seller for the
Cash Escrow Amount allocable to, and being deposited by the Buyer on behalf of,
each of Bunch and McCully and for the Share Escrow Amount allocable to, and
being deposited by the Buyer on behalf of, White. The subaccount of each Seller
under the Escrow Amount shall be reduced from time to time by the release to the
Buyer of such funds or share certificates equal to the amount of Damages (as
defined) with respect to which the Buyer is entitled to indemnity pursuant to
Article VI and by the amount of any award or judgment obtained post-Closing by
the Buyer or the Company against such Seller under any of the other Acquisition
Agreements, subject in each case to the procedures set forth in the Escrow
Agreement. Upon any reduction of the Escrow Amount resulting from an indemnity
claim hereunder, the subaccount of the Seller liable thereunder shall be reduced
to reflect such payment.
(c) The Escrow Agreement shall further provide, among other things,
that on August 11, 2001, any funds or share certificates held in escrow in any
subaccount for a Seller shall be released to such Seller; provided, however,
that if, and to the extent that, there are one or more pending claims against
any Seller at the close of business on August 10, 2001, the Escrow Agent shall
continue to hold in escrow the funds or share certificates, as the case may be,
that are equal to the amount of such claim or claims, as set forth in the notice
or notices given pursuant to Section 6.03 of this Agreement, unless and until
such claim or claims are resolved in one of the manners contemplated by the
Escrow Agreement.
1.10. SHARE LEGENDS. (a) The Buyer and the Sellers each acknowledge
that neither the Shares, nor the shares of the Buyer Common Stock representing
the Share Consideration (the "BUYER SHARES"), will be registered in connection
with the Acquisition. Accordingly, both the Seller Share Certificates and the
Buyer Share Certificates will be imprinted with the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD
OR OTHERWISE TRANSFERRED IN THE ABSENCE OF
SUCH REGISTRATION OR AN EXEMPTION THEREFROM
UNDER SUCH ACT AND ANY APPLICABLE STATE
SECURITIES LAWS.
(b) In addition, the Buyer Share Certificates will be imprinted with
the following legend:
FURTHERMORE, PRIOR TO AUGUST 11, 2001, THE
SHARES REPRESENTED BY THIS CERTIFICATE MAY BE
SOLD OR OTHERWISE TRANSFERRED ONLY IN
COMPLIANCE WITH THE CONDITIONS SPECIFIED IN
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SECTION 5.14 OF THE STOCK PURCHASE AGREEMENT,
DATED AS OF AUGUST 11, 2000, AMONG MAXCOR
FINANCIAL GROUP INC. AND CERTAIN
STOCKHOLDERS, A COMPLETE AND CORRECT COPY OF
WHICH IS AVAILABLE AT THE PRINCIPAL OFFICES
OF MAXCOR FINANCIAL GROUP INC. AND WILL BE
FURNISHED WITHOUT CHARGE TO THE HOLDER HEREOF
UPON WRITTEN REQUEST.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Each of the Sellers severally, and not jointly, represents and warrants
to the Buyer with respect to such Seller, the Shares and Notes owned by such
Seller and any shares of the Buyer Common Stock receivable by such Seller that:
2.01. TITLE TO SHARES. Such Seller owns of record the number of Shares
set forth opposite such Seller's name on Schedule 1, free and clear of all
Liens, except for the existing shareholders' agreement, dated May 19, 2000 (the
"SHAREHOLDERS' AGREEMENT"), between the Company and each Seller. Such Seller has
full voting power over the Shares owned by him, and, except for the
Shareholders' Agreement, the Shares are not subject to any proxy, shareholders'
agreement or voting trust, and such Seller has full right, power and authority
to sell and deliver the Shares in the manner provided for in this Agreement.
Upon consummation of the Acquisition, the Shareholders' Agreement shall
terminate of its own accord, without any further action required of the Company
or such Seller, and such Seller will have transferred to the Buyer good title to
the Shares held by him, free and clear of all Liens.
2.02. TITLE TO THE NOTE. Each of White and Bunch owns the Note held by
him, free and clear of all Liens. Such Seller has full right, power and
authority to sell and deliver the Note in the manner provided for in this
Agreement. Upon transfer of the Note, such Seller will have transferred to the
Buyer good title to the Note, free and clear of all Liens.
2.03. AUTHORIZATION. Such Seller has taken all action under the
Shareholders' Agreement and the Settlement Agreement (as defined) necessary to
authorize (i) such Sellers' execution and delivery of, and performance of his
obligations under, this Agreement and each of the Acquisition Agreements to
which such Seller is party and the consummation by such Seller of the
transactions contemplated hereby and thereby and (ii) the Company's execution
and delivery of, and performance of its obligations under, each of the
Acquisition Agreements to which it is a party and the consummation by the
Company of the transactions contemplated thereby. Assuming due execution and
delivery by the other Parties, this Agreement is, and each of the Acquisition
Agreements to which such Seller is a party will be, a valid and legally binding
obligation of such Seller, enforceable in accordance with its terms, subject to
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applicable bankruptcy, insolvency and similar laws of general application
affecting the enforcement of creditors' rights generally and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law).
2.04. GOVERNMENTAL AUTHORIZATION. The execution, delivery and
performance by such Seller of this Agreement and by such Seller and the Company
of the Acquisition Agreements to which they are parties, and the consummation of
the transactions contemplated hereby and thereby, require no action by or in
respect of, or filing with, any Governmental Body by such Seller. "GOVERNMENTAL
BODY" means any foreign, federal, state, municipal or other government, or any
department, commission, investigative body, board bureau, agency, public
authority or instrumentality thereof, or any court, mediator, arbitrator,
self-regulatory organization or other tribunal.
2.05. NON-CONTRAVENTION. The execution, delivery and performance by
such Seller of this Agreement and each other Acquisition Agreement to which such
Seller is a party, and the authorization by the Company of this Agreement, does
not and will not (i) violate any law, order, rule, regulation, injunction or
judgment applicable to such Seller, (iii) require any consent or other action by
any Person under, constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) under, or give rise to any right of
termination, modification or acceleration of any right or obligation of such
Seller under, or result in loss of any benefit to which such Seller is entitled
under, any material agreement or other material instrument binding upon or held
by such Seller or (iii) result in the creation or imposition of any Lien on the
Shares owned by such Seller or any material asset of such Seller.
2.05. INVESTMENT INTENT; NO REGISTRATION. White is acquiring the Buyer
Shares for investment, and not with a view to, or for resale in connection with,
a public offering or distribution thereof. White is aware that the Buyer Shares
are not registered under the Securities Act of 1933, as amended (the "SECURITIES
ACT"), and, further, are subject to the transfer restrictions set forth in
Section 5.14 and accordingly, that he may not be able to sell or otherwise
dispose of the Buyer Shares when he wishes to do so. White acknowledges that (i)
he has received from the Buyer all information about the Buyer that he has
requested, (ii) he has made his own analysis, and fully understands, the
economic value of the Buyer Shares, and (iii) he has such knowledge and
experience in financial and business matters that he is capable of using the
information that is available to him concerning the Buyer to evaluate the risks
of acquiring the Buyer Shares.
2.06. BUYER DISCLOSURE. Such Seller acknowledges that, notwithstanding
the representation of the Buyer in Section 4.03, the Buyer has been and will be
exploring the possibility of selling investments in the Company to investors
following the Closing and that the valuation of the Company implied by any such
investments may be significantly greater than the Consideration.
2.07. FINDERS' FEES. There is no investment banker, broker, trader or
other intermediary which as been retained by or is authorized to act on behalf
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of such Seller and which might be entitled to any fee or commission in
connection with the transactions contemplated by this Agreement.
2.08. FULL DISCLOSURE. The representations and warranties of such
Seller contained in any Acquisition Agreement to which he is a party, and the
statements contained in any certificate or schedule furnished by or on behalf of
such Seller to the Buyer or the Company pursuant thereto, do not contain any
untrue statement of a material fact, or omit to state any material fact
necessary, in the light of the circumstances under which they were or are made,
in order to make the statements herein and therein, taken as a whole, not
misleading in any material respect.
ARTICLE III.
ADDITIONAL REPRESENTATIONS AND WARRANTIES OF THE SELLERS
For purposes of this Article III, references to "Acquisition Agreement"
or "Acquisition Agreements" shall not include the Restricted Stock Grant.
Subject to the foregoing, each of the Sellers jointly and severally warrants to
the Buyer that:
3.01. CORPORATE EXISTENCE AND POWER. The Company is a corporation duly
organized, validly existing and in good standing under the Laws of the State of
Delaware, and has all corporate powers required to own, lease and operate its
properties and assets and to conduct its business as now conducted and to carry
out its responsibilities under each Acquisition Agreement to which it is a
party. The Company has heretofore delivered to the Buyer a true and complete
copy of each of the Company's Certificate of Incorporation and Bylaws, in each
case as in effect as of the date hereof. The Company is duly qualified to do
business as a foreign corporation, and is in good standing, (x) in each of New
York and New Jersey and (y) in each other jurisdiction where such qualification
is required for the conduct of its business as now conducted except where the
absence of such qualification would not individually or in the aggregate have a
Company Material Adverse Effect (as defined).
3.02. SUBSIDIARIES AND AFFILIATES. The Company does not have, and has
not had, any Subsidiaries (as defined). Other than the Sellers and Daniel A.
White Consulting Inc. ("CONSULTANT"), the Company does not have, and has not
had, any Affiliates (as defined). The Company does not have outstanding any
capital commitments with respect to principal, joint venture or similar
investments. "SUBSIDIARY" means, with respect to any person or entity (a
"PERSON"), any other entity (i) of which fifty percent or more of either the
equity interests in, or the voting control of, such entity is, directly or
indirectly, beneficially owned by the referenced Person, or (ii) of which the
referenced Person has the ability to (x) elect fifty percent or more of the
directors or members of the governing board of such entity or (y) appoint either
the general partner of a general partnership or limited partnership or the
managing member of a limited liability company. "AFFILIATE" means, with respect
to any Person, any other Person directly or indirectly controlling, controlled
by, or under common control with any such Person, where "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the
ownership of voting securities, by agreement or otherwise; provided, however,
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that an officer of the Company who is not also either a director or stockholder
of the Company shall not, for purposes of this Agreement, be deemed to be an
Affiliate of the Company solely by reason of such office holding.
3.03. AUTHORIZATION. The Company has the requisite corporate power and
authority, and has taken all corporate action necessary, in order to authorize
(i) the Sellers' execution and delivery of, and performance of their respective
obligations under, this Agreement and the consummation by the Sellers of the
transactions contemplated hereby, and (ii) the Company's execution and delivery
of, and performance of its obligations under, each of the Acquisition Agreements
to which it is a party and the consummation by the Company of the transactions
contemplated thereby. Assuming due execution and delivery by the other Parties,
each of the Acquisition Agreements to which the Company is a party will be a
valid and legally binding obligation of the Company, enforceable in accordance
with its terms, subject to applicable bankruptcy, insolvency and similar laws of
general application affecting the enforcement of creditors' rights generally and
subject, as to enforceability, to general principles of equity (regardless of
whether enforcement is sought in a proceeding in equity or at law).
3.04. GOVERNMENTAL AUTHORIZATION. The execution, delivery and
performance by Sellers of this Agreement and by Sellers and the Company of the
Acquisition Agreements to which they are parties, and the consummation of the
transactions contemplated hereby and thereby, require no action by or in respect
of, or filing with, any Governmental Body by the Company. "GOVERNMENTAL BODY"
means any foreign, federal, state, municipal or other government, or any
department, commission, investigative body, board bureau, agency, public
authority or instrumentality thereof, or any court, mediator, arbitrator,
self-regulatory organization or other tribunal.
3.05. NON-CONTRAVENTION. The execution, delivery and performance by
each Seller of this Agreement, and by the Company and any applicable Seller of
each Acquisition Agreement to which the Company is a party, and the
authorization by the Company of this Agreement, does not and will not (i)
violate the Company's Certificate of Incorporation or Bylaws, (ii) violate any
law, order, rule, regulation, injunction or judgment applicable to the Company,
(iii) except as provided in Schedule 3.05 to the disclosure schedule separately
heretofore provided by the Sellers to the Buyer (the "SELLERS' DISCLOSURE
SCHEDULE"), require any consent or other action by any Person under, constitute
a default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or give rise to any right of termination,
modification or acceleration of any right or obligation of the Company under, or
result in loss of any benefit to which the Company is entitled under, any
material agreement or other material instrument binding upon or held by the
Company or (iv) result in the creation or imposition of any Lien on the Shares
or any material asset of the Company.
3.06. CAPITALIZATION. The authorized capital stock of the Company
consists solely of five thousand (5,000) shares of Common Stock. The Shares
constitute the only issued and outstanding shares of Common Stock. All of the
Shares have been duly authorized and are legally and validly issued, fully paid
and nonassessable. The Company does not have outstanding any securities
convertible into or exchangeable for, or options, warrants or other rights to
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acquire, any of its capital stock (collectively, "RIGHTS") and does not have any
obligation to make any payment in respect of any capital stock of the Company.
Schedule 1 sets forth a true, complete and correct list of each holder of Common
Stock of the Company and the number of Shares each Seller owns as of the date
hereof. Except for the Shares set forth opposite his name, no Seller has any
rights or claims with respect to any ownership interest in the Company.
3.07. FINANCIAL STATEMENTS; LIABILITIES. (a) Included as Schedule
3.07(a) to the Sellers' Disclosure Schedule are true, correct and complete
copies of the compiled financial statements of the Company at and for the period
ended May 26, 2000 (the "COMPILED FINANCIAL STATEMENTS"). The Compiled Financial
Statements are complete and correct in all material respects and have been
prepared in accordance with U.S. generally accepted accounting principles
applied on a consistent basis ("GAAP"), except as disclosed in the accountant's
compilation report attached thereto and except that statements of stockholders'
equity, cash flows and notes to financial statements, which are required under
GAAP, have not been included in the Compiled Financial Statements and, as a
result, information concerning the Company which would otherwise, pursuant to
GAAP, be disclosed in such statements and notes was not presented, and except
that the Compiled Financial Statements were prepared without liability accruals
(except as specifically noted therein). Subject to the foregoing, the Compiled
Financial Statements present fairly the financial condition of the Company as of
the dates thereof and of the results of its operations for the period then
ended. The balance sheet as of May 26, 2000 included in the Compiled Financial
Statements is hereinafter referred to as the "BALANCE SHEET" and the date
thereof as the "BALANCE SHEET DATE."
(b) As of the Closing, the Company does not have any direct or indirect
liability, claim, loss, damage, deficiency, obligation or responsibility, known
or unknown, fixed or unfixed, choate or inchoate, liquidated or unliquidated,
secured or unsecured, accrued, absolute, contingent or otherwise, whether or not
required to be set forth on a financial statement or the notes thereto in
accordance with GAAP (collectively, the "LIABILITIES"), that was not set forth
on Schedule 3.07(b)(1) to the Sellers' Disclosure Schedule, other than
Liabilities aggregating to less than ten thousand dollars ($10,000) ("BASKET
LIABILITIES"). Said Schedule 3.07(b)(1) sets forth (x) each Liability on the
Closing Date by description and amount and (y) the assumptions, and the bases
therefor, used in computing each Liability set forth thereon that is an accrual.
For purposes of calculating the amount, if any, of the Basket Liabilities, only
Liabilities that are missing from or, subject to the immediately following
sentence, understated on, said Schedule 3.07(b)(1) shall be taken into account,
so that Liabilities, if any, that are overstated on said Schedule 3.07(b)(1)
shall, subject to the immediately following sentence, have no offsetting or
other effect on the calculation. Notwithstanding the foregoing, with respect to
liability accruals which are based on estimates (as contrasted with pro rata
calculations of periodic amounts which are known on the date of this Agreement,
such as payroll and lease payments), any such estimated accruals which are
overstated may be used to offset any such estimated accruals which are
understated. Since the Balance Sheet Date, the Company has not incurred any
Liabilities except for Liabilities (i) set forth on Schedule 3.07(b)(2) to the
Sellers' Disclosure Schedule, (ii) incurred pursuant to (and in accordance with
the terms of) a Material Contract (as defined) set forth on Schedule 3.09 to the
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Sellers' Disclosure Schedule or (iii) that, together with the Basket
Liabilities, aggregate to less than ten thousand dollars ($10,000).
(c) As of the Closing, the only unpaid legal fees, costs or expenses
incurred by or on behalf of the Company are the fees set forth on SCHEDULE 4
(the "LEGAL FEES").
3.08. ABSENCE OF MATERIAL ADVERSE EFFECTS; CONDUCT OF BUSINESS. Since
the Balance Sheet Date, there has not been any event that, individually or
together with all other events, has had or could reasonably be expected to have
a Company Material Adverse Effect. "COMPANY MATERIAL ADVERSE EFFECT" means a
material adverse effect on the business, conditions (financial or otherwise),
assets, liabilities or results of operations of the Company or on the Sellers'
or the Company's ability to perform their obligations under each Acquisition
Agreement to which any of them is a party. Since the Balance Sheet Date, except
as contemplated or required by this Agreement or as set forth on Schedule 3.08
to the Sellers' Disclosure Schedule, the Company has conducted its business in
the ordinary course, in a manner consistent with past practice. Without limiting
the generality of the foregoing, since the Balance Sheet Date, except as set
forth on Schedule 3.08 to the Seller's Disclosure Schedule, the Company has not:
(a) made, declared, set aside or paid a dividend or made any other
distribution or payment in cash, stock or property in respect of any shares of
its capital stock (including the Common Stock), or paid any bonus or
extraordinary amount or repaid any note or obligation to officers or employees
of the Company, Consultant or any Affiliate or holders of the Common Stock;
(b) sold, transferred, disposed of or discontinued any material portion
of its assets, business or properties or otherwise permitted or allowed any of
its assets or properties (real, personal or mixed, tangible or intangible) to be
subjected to any Lien;
(c) written-off or compromised any material receivable of or material
debt owed to the Company; or
(d) agreed or committed to do any of the foregoing.
3.09. CONTRACTS. (a) Schedule 3.09(a) to the Sellers' Disclosure
Schedule sets forth a true, complete and correct list of all Material Contracts
to which the Company is a party or pursuant to which it, the Shares or its
assets are bound. "MATERIAL CONTRACT" means any contract, lease, indebtedness,
agreement or understanding, whether written or oral, including all amendments or
modifications thereto (i) providing for annual payments of twenty-five thousand
dollars ($25,000) or more or aggregate payments of fifty thousand dollars
($50,000) or more, (ii) for the purchase or rental of real property, (iii)
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evidencing indebtedness for borrowed money, (iv) with any related party of the
Company or Consultant (e.g., an officer, director, employee or shareholder of
the Company or Consultant, or a family member or Affiliate of any of the
foregoing) or with Consultant or any Affiliate of the Company or Consultant, (v)
providing for employment terms, conditions, rights or benefits of any director,
officer or employee (including severance or retirement obligations), (vi)
relating to any partnership, joint venture or similar arrangement, or any
agreement to buy or sell a material amount of the business, stock or assets of
the Company or any other Person, (vii) relating to obligations of
confidentiality, (viii) requiring or committing the Company to indemnify any
Person, (ix) providing a power of attorney to any other Person with respect to
the Company or its business or assets, (x) requiring or committing the Company
to develop or license any software to a third party, (xi) relating to the
licensing or escrow of any software or source code of or used by the Company,
(xii) restricting the conduct of the Company's business in any material manner
or (xiii) that is otherwise material to the Company.
(b) The Company has delivered or otherwise made available to the Buyer
a true, complete and correct copy of each Material Contract (including all
amendments or modifications thereto). Each Material Contract is a valid and
binding agreement of the Company and, to the knowledge of Sellers, the other
parties thereto and is in full force and effect, and, except as set forth on
Schedule 3.09(b) of the Sellers' Disclosure Schedule, the Sellers do not know of
the Company having received notice of any violation of any Material Contract by
the Company from any of the other parties thereto. Except as set forth on said
Schedule 3.09(b), with respect to each Material Contract, neither the Company
nor, to the knowledge of the Sellers, any other party is in breach or default
thereunder and no event has occurred which with notice or lapse of time or both
would constitute a breach or default by the Company thereunder or, to the
knowledge of the Sellers, any other party thereunder, or give rise to any right
of termination, modification or acceleration of any right or obligation of the
Company thereunder or, to the knowledge of the Sellers, any other party
thereunder, or result in loss of any benefit to which the Company is entitled
thereunder.
3.10. LITIGATION. There is no litigation, at law or in equity, or
proceeding pending or, to the knowledge of the Sellers, threatened against the
Company or any of its properties or any employee, officer or director of the
Company (past and present), each in his capacity as such, or any Seller, before
any Governmental Body. Neither the Sellers nor the Company has received any
communication from or on behalf of any Person alleging that their consent is or
may be required in connection with the transactions contemplated by this
Agreement or any other Acquisition Agreement (other than Persons, other than the
Sellers, Consultant and the Company, who are to be parties to an Acquisition
Agreement).
3.11. COMPLIANCE WITH LAW AND JUDGMENTS. To the knowledge of the
Sellers, the business of the Company is not being and has not been conducted in
violation of any applicable law, statute, ordinance, rule, regulation or other
legal requirement of any Governmental Body (collectively, "LAW"), except for any
such violations that in the aggregate would not reasonably be expected to have a
Company Material Adverse Effect. The business of the Company is not being and
has not been conducted in violation of any order, judgment, injunction or decree
of any Governmental Body (collectively, "JUDGMENT"). Except as set forth on
Schedule 3.11 to the Sellers' Disclosure Schedule, neither the Company nor any
of its properties is subject to any Judgment.
3.12. PROPERTIES. The Company has good title to, or in the case of
leased property has valid leasehold interests in, all property and assets
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(whether real or personal, tangible or intangible) reflected on the Balance
Sheet or acquired after the Balance Sheet Date, except for property and assets
sold or transferred since the Balance Sheet Date in the ordinary course of
business consistent with past practices. Such property and assets constitute all
of the property and assets used in or held for use in the conduct of the
Company's business. None of such property or assets (except that sold or
transferred since the Balance Sheet Date in the ordinary course of business
consistent with past practices) is subject to any Liens. The Company does not
own any real property.
3.13. INSURANCE COVERAGE. Schedule 3.13 to the Sellers' Disclosure
Schedule sets forth a complete and accurate list of all insurance policies owned
or held by the Company. Except as set forth on Schedule 3.13 to the Sellers'
Disclosure Schedule, all such policies are in full force and effect, all
premiums with respect thereto covering all periods up to and including the
Closing Date have been paid, and no notice of cancellation or termination has
been received with respect to any such policy, except for such notices with
respect to which the policy has been reinstated or notice withdrawn subsequent
to the issuance thereof. All material insurance loss runs (including workmen's
compensation claims) received in respect of the Company for the past two policy
years are also set forth on Schedule 3.13 to the Sellers' Disclosure Schedule.
3.14. MINUTES. The Company's minute book, a true and correct copy of
which has been provided to the Buyer, accurately reflects all material action
taken by, and authorizations made at meetings of, the Board of Directors (or any
committees thereof) and/or the shareholders of the Company, except as set forth
on Schedule 3.14 to the Sellers' Disclosure Schedule.
3.15. FINDERS' FEES. There is no investment banker, broker, trader or
other intermediary which has been retained by or is authorized to act on behalf
of the Company and which might be entitled to any fee or commission in
connection with the transactions contemplated by this Agreement.
3.16. EMPLOYEE BENEFIT MATTERS. (a) Schedule 3.16(a) to the Sellers'
Disclosure Schedule sets forth a true and complete list of each employee or
director benefit plan, arrangement or agreement, including without limitation
any employee welfare benefit plan within the meaning of Section 3(1) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), any
employee pension benefit plan within the meaning of Section 3(2) of ERISA
(whether or not such plan is subject to ERISA) and any bonus, incentive,
deferred compensation, vacation, stock purchase, stock option, severance,
employment, change of control or fringe benefit plan, program or agreement
(collectively, the "EMPLOYEE BENEFIT PLANS") sponsored, maintained, contributed
to or required to be contributed to by the Company for the benefit of any
current or former employee or director of the Company.
(b) The Company has heretofore provided to the Buyer true and complete
copies of each of the Employee Benefit Plans, as well as (i) each writing
constituting a part of such Employee Benefit Plan, including all amendments
thereto; (ii) the two most recent Annual Reports (Form 5500 Series) and
accompanying schedules, if any; (iii) the most recent determination letter from
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the Internal Revenue Service ("IRS"), if applicable, for such Employee Benefit
Plan; (iv) a copy of the two most recent annual reports and actuarial reports,
if required under ERISA; and (v) if the Employee Benefit Plan is funded through
a trust or any third party funding vehicle, a copy of the trust or other funding
vehicle.
(c) (i) Each of the Employee Benefit Plans intended to be "qualified"
within the meaning of Section 401(a) of the Internal Revenue Code of 1986, as
amended (the "CODE") is so qualified, and there are no existing circumstances or
any events that have occurred that could reasonably be expected to adversely
affect the qualified status of any such plan; (ii) no Employee Benefit Plan is
subject to Title IV of ERISA, and the Company has never sponsored, maintained,
contributed to or been required to contribute to any Employee Benefit Plan
subject to Title IV of ERISA; (iii) the Company is not a participant in, nor
required to make contributions to, any "multiemployer plan" within the meaning
of Section 3(37) of ERISA and no withdrawal liability has been incurred by or
asserted against the Company with respect to any multiemployer plan; (iv) except
as set forth on Schedule 3.16(c) to the Sellers' Disclosure Schedule, no
Employee Benefit Plan provides benefits, including without limitation death or
medical benefits (whether or not insured), with respect to current or former
directors or employees of the Company beyond their termination of service, other
than coverage mandated by applicable Law; (v) all contributions or other amounts
payable by the Company as of the date hereof with respect to each Employee
Benefit Plan in respect of current or prior plan years have been paid or accrued
in accordance with Section 412 of the Code; (vi) each of the Employee Benefit
Plans has been operated and administered in all material respects in accordance
with their respective terms and applicable Laws, including, but not limited to,
ERISA, the Code and the applicable regulations thereunder; and (vii) there are
no pending, or to the knowledge of the Sellers, threatened or anticipated,
claims (other than routine claims for benefits) by, on behalf of or against any
of the Employee Benefit Plans or any trusts related thereto.
(d) Neither the execution and delivery of this Agreement or any other
Acquisition Agreement, nor the consummation of the transactions contemplated
hereby or thereby (either alone or in conjunction with any other event), will
(i) result in any payment (including, without limitation, severance,
unemployment compensation, "excess parachute payment" (within the meaning of
Section 280G of the Code), forgiveness of indebtedness or otherwise) becoming
due to any director, officer or employee of the Company under any Employee
Benefit Plan, (ii) increase any benefits otherwise payable under any Employee
Benefit Plan or (iii) result in any acceleration of the time of payment or
vesting of any such benefits.
3.17. PERSONNEL AND LABOR MATTERS. (a) Schedule 3.17(a) to the Sellers'
Disclosure Schedule sets forth a complete and correct list of all employees of
the Company, together with such individual's title and/or job description, date
of hire, salary (with last date of increase), bonuses paid in respect of each of
1999 and 2000, and a description of any other material compensation arrangements
or agreements affecting such individual.
(b) The Company is not a party to any collective bargaining agreement
with any labor organization, nor has the Company agreed to recognize any union
or other collective bargaining unit, nor has any union or other collective
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bargaining unit been certified as representing any of the employees of the
Company. Except as set forth in Schedule 3.17(b) to the Sellers' Disclosure
Schedule, no employees of the Company have left or been terminated in calendar
year 2000.
(c) Schedule 3.17(c) to the Sellers' Disclosure Schedule sets forth a
complete list of each Person engaged by the Company since January 1, 1998 to
render consulting or similar services to the Company as an independent
contractor.
3.18. TAXES. (a) Except as set forth on Schedule 3.18(a) to the
Sellers' Disclosure Schedule, all Tax Returns (as defined) required to be filed
have been timely filed, all such Tax Returns are correct and complete in all
material respects, and all Taxes due and owing have been timely paid. The
Company has delivered to the Buyer correct and complete copies of all Tax
Returns that have been filed for all open years. Adequate accruals or reserves
have been established on the Balance Sheet for Taxes accrued but not yet due and
owing as of the Balance Sheet Date. Except as set forth on Schedule 3.18(a) to
the Sellers' Disclosure Schedule, the Company has complied in all material
respects with all applicable Laws and Judgments relating to Taxes required to be
withheld or collected, including, without limitation, Taxes required to be
withheld pursuant to Sections 1441 and 1442 of the Code and Taxes required to be
withheld from employee wages. There are no Liens for Taxes on any assets of the
Company, except for statutory-based liens for current Taxes not yet due.
(b) Except as set forth in Schedule 3.18(b) to the Sellers' Disclosure
Schedule, (i) there has not been any audit of any Tax Return and no audit of any
such Tax Return is in progress and neither the Company nor any Seller has been
notified by any Governmental Body responsible for the determination, assessment
or collection of Taxes ("TAX AUTHORITY") that any such audit is contemplated or
pending, (ii) no Tax deficiency or claim for additional Taxes has been asserted
or, to the knowledge of the Sellers, threatened to be asserted by any Tax
Authority, and (iii) no extension of time with respect to any date on which a
Tax Return was or is to be filed has been requested or is in force, and no
waiver or agreement has been requested or is in force for the extension of time
for the assessment or payment of any Tax. Neither the Company nor any Seller has
been informed by any jurisdiction that the jurisdiction believes that the
Company was required to file any Tax Return that was not filed.
(c) The Company is not a "consenting corporation" within the meaning of
Section 341(f) of the Code, and none of the assets of the Company are subject to
an election under Section 341(f) of the Code. The Company does not have any
actual or potential liability for any taxes of any Person (other than the
Company) under Treasury Regulations Section 1.1502-6 (or any similar provision
of Law in any jurisdiction), or as a transferee or successor, by contract, or
otherwise. Nor is the Company a party to or bound by any tax indemnity, tax
sharing or tax allocation agreement.
(d) For purposes of this Agreement, "TAX" includes all federal, state,
local and foreign taxes or assessments, including income, sales, gross receipts,
excise, use, value added, royalty, franchise, payroll, withholding, property and
import taxes and any additions to tax, interest or penalties applicable thereto,
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and "TAXES" includes all taxes required to be paid by the Company. For purposes
of this Agreement, the term "TAX RETURN" means any report, return, statement,
declaration or other written information required to be supplied to a Tax
Authority in connection with Taxes and any amended returns.
3.19. INTELLECTUAL PROPERTY. (a) The Company owns, or is licensed or
otherwise has the legal rights to use, all patents and patent applications,
domain names, trademarks and service marks, trademark and service mark
registrations and applications, trade names, logos, copyrights, copyright
registrations and applications, web site content, trade secrets, know-how,
proprietary processes and formulae and computer software programs as are used or
held for use by the Company for the conduct of its business (collectively, the
"INTELLECTUAL PROPERTY"), subject to the further provisions of this Section
3.19(a), and the use of such Intellectual Property in the conduct of such
business does not (i) to the Sellers' knowledge, infringe or violate any patent
or trademark right or contract right of any Person or (ii) infringe or violate
(x) any copyright or trade secret right or intellectual property right (other
than a patent, trademark or contract right) of any Person or (y) any settlement
agreements or Judgments applicable to the Company or by which its assets are
bound.
(b) Schedule 3.19(b) to the Sellers' Disclosure Schedule sets forth, to
the extent owned by the Company, a complete and accurate list of all U.S., state
and foreign: (i) patents and patent applications; (ii) trademark and service
mark registrations (including Internet domain name registrations) and trademark
and service mark applications, (iii) material unregistered trademarks and
service marks; (iv) copyright registrations and copyright applications and (v)
material unregistered copyrights. Neither the Company nor any Seller has
received any notice from any third party challenging the validity of the
ownership or the right of the Company to use any of the Intellectual Property
listed in said Schedule.
(c) Schedule 3.19(c) to the Sellers' Disclosure Schedule identifies (i)
by name and general description all computer programs, including software
implementations of algorithms, models and methodologies, whether in source code
or object code form, databases and compilations, and all documentation,
including user manuals and training manuals, related to any of the foregoing
(collectively, "SOFTWARE") owned by the Company ("PROPRIETARY SOFTWARE") and
(ii) each web site owned by the Company ("WEB SITES").
(d) Except as set forth in Schedule 3.19(d) to the Sellers' Disclosure
Schedule, any Intellectual Property owned by the Company, and to the knowledge
of the Sellers, any Intellectual Property used but not owned by the Company, has
been duly maintained and has not expired or been cancelled (if applicable) or
abandoned.
(e) Except as set forth in Schedule 3.19(e) to the Sellers' Disclosure
Schedule: (i) to the knowledge of the Sellers, no claims, or threat of claims,
have been asserted by any Person related to the use in the conduct of the
Company's business of any Intellectual Property rights or challenging or
questioning the validity or effectiveness of any material license or agreement
relating to the Intellectual Property; and no such claims or threats of claims
are still in effect or pending; (ii) no settlement agreements, consents,
Judgments, forbearance to sue or similar obligations limit or restrict the
Company or any of its rights in and to any Intellectual Property; (iii) the
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Company has not licensed or sublicensed its rights in any Intellectual Property,
or received or been granted any such rights; and (iv) to the knowledge of the
Sellers, no third party is misappropriating, infringing, diluting or violating
any Intellectual Property owned by the Company.
(f) The Company has taken what the Sellers believe to be reasonable and
practicable steps designed to safeguard and maintain the secrecy and
confidentiality of, and its proprietary rights in, all of the Intellectual
Property owned by the Company, including where appropriate entering into
confidentiality and or nondisclosure agreements with officers, subcontractors,
independent contractors and full and part-time employees.
(g) All Proprietary Software and Web Sites were either developed (i) by
employees of the Company within the scope of their employment; (ii) by
independent contractors as "works-made-for-hire," as that term is defined under
Section 101 of the United States Copyright Act, 17 U.S.C. ss. 101, pursuant to
written agreement; or (iii) by third parties who have assigned all of their
rights therein to the Company pursuant to a written agreement. No former or
present employees, officers or directors of the Company or of Consultant, or
other third parties who have developed or participated in the development of the
Proprietary Software or Web Sites, retain any rights of ownership or use of the
Proprietary Software or Web Sites, and no such persons have asserted any claims
to any rights therein.
3.20. YEAR 2000 COMPLIANCE. Except as set forth on Schedule 3.20 to the
Sellers' Disclosure Schedule, all Software (whether embedded or otherwise),
systems and hardware owned, presently being used or held for use, licensed or
relied on by the Company is Year 2000 Compliant, and the Company is not aware of
any material Y2K-related problems experienced by its Software, systems and
hardware. In addition, the Company has not been informed by any other entities
on which it relies that any such parties experienced any Y2K-related problems.
The term "YEAR 2000 COMPLIANT" means for all dates and times, when used on a
stand-alone system or in combination with other software or systems: (i) the
application system functions and receives and processes dates and times
correctly without abnormal results; (ii) all date related calculations are
correct (including, without limitation, age calculations, duration calculations
and scheduling calculations); (iii) all manipulations and comparisons of
date-related data produce correct results for all valid date values within the
scope of the application; (iv) there is no post-1900 century ambiguity; and (v)
leap years subsequent to 1900 are accounted for and correctly identified.
3.21. BANK ACCOUNTS. Set forth in Schedule 3.21 to the Sellers'
Disclosure Schedule is the name of each bank, safe deposit company or other
financial institution in which the Company has an account, lock box or safe
deposit box and the names of all Persons authorized to draw thereon or have
access thereto.
3.22. FULL DISCLOSURE. The representations and warranties of the
Company contained in any Acquisition Agreement to which it is a party, and the
statements contained in any certificate or schedule furnished by or on behalf or
the Company to the Buyer pursuant thereto, do not contain any untrue statement
of a material fact, or omit to state any material fact necessary, in the light
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of the circumstances under which they were or are made, in order to make the
statements herein and therein, taken as a whole, not misleading in any material
respect.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Sellers (in the case of
Sections 4.01 through 4.08 and Section 4.10 below) and to White (in the case of
Section 4.09 below) that:
4.01. CORPORATE EXISTENCE . The Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
4.02. AUTHORIZATION. The Buyer has the requisite corporate power and
authority, and has taken all corporate action necessary, in order to authorize
the Buyer's execution and delivery of, and performance of its obligations under,
this Agreement and each of the Acquisition Agreements to which it is a party and
the consummation by the Buyer of the transactions contemplated hereby and
thereby. Assuming due execution and delivery by the other Parties, each of this
Agreement and the Acquisition Agreements to which it is a party will be a valid
and legally binding obligation of the Buyer, enforceable in accordance with its
terms, subject to applicable bankruptcy, insolvency and similar laws of general
application affecting the enforcement of creditors' rights generally and
subject, as to enforceability, to general principles of equity (regardless of
whether enforcement is sought in a proceeding in equity or at law).
4.03. GOVERNMENTAL AUTHORIZATION. Except for any notice required to be
given to the Nasdaq Stock Market in connection with the issuance of the Buyer
Shares, the execution, delivery and performance by the Buyer of this Agreement
and of the Acquisition Agreements to which it is a party, and the consummation
of the transactions contemplated hereby and thereby, require no action by or in
respect of, or filing with, any Governmental Body by the Buyer.
4.04. INVESTMENT INTENT; NO REGISTRATION. The Buyer is acquiring the
Shares and the Note for investment, and not with a view to, or for resale in
connection with, a public offering or distribution thereof. The Buyer is aware
that neither the Shares nor the Note are registered under the Securities Act
and, accordingly, that it may not be able to sell or otherwise dispose of the
Shares or the Note when it wishes to do so. The Buyer acknowledges that (i) it
has received from the Company all information about the Company that it has
requested, (ii) it has made its own analysis, and fully understands, the
economic value of the Shares and the Notes, and (iii) it has such knowledge and
experience in financial and business matters that it is capable of using the
information that is available to it concerning the Company to evaluate the risks
of purchasing the Shares and the Notes.
4.05. NON-CONTRAVENTION. The execution, delivery and performance by the
Buyer of this Agreement and each other Acquisition Agreement to which it is a
party does not and will not (i) violate the Buyer's Certificate of Incorporation
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or Bylaws, (ii) violate any Law or Judgment applicable to the Buyer, (iii)
require any consent or other action by any Person under, constitute a default
(or an event which, with notice or lapse of time or both, would constitute a
default) under, or give rise to any right of termination, modification or
acceleration of any right or obligation of the Buyer under, or result in loss of
any benefit to which the Buyer is entitled under, any material agreement or
other material instrument binding upon or held by the Buyer or (iv) result in
the creation or imposition of any Lien on any asset of the Buyer, except, in the
case of clauses (ii), (iii) and (iv), for any such violations, failures to
obtain consent, defaults, rights of termination, modification or acceleration,
losses of benefits and Liens that, individually and in the aggregate, would not
have a Buyer Material Adverse Effect. "BUYER MATERIAL ADVERSE EFFECT" means a
material adverse effect on the Buyer's ability to timely perform its obligations
under this Agreement and each other Acquisition Agreement to which it is a
party.
4.06. LITIGATION. There is no litigation, at law or in equity, or
proceeding pending or, to the knowledge of the Buyer, threatened against, or
affecting, the Buyer before any Governmental Body which, if adversely decided,
would reasonably be expected to have a Buyer Material Adverse Effect. The Buyer
is not subject to any Judgment which, individually or in the aggregate, could
reasonably be expected to have a Buyer Material Adverse Effect.
4.07. FINDERS' FEES. There is no investment banker, broker, trader or
other intermediary which has been retained by or is authorized to act on behalf
of the Buyer and which might be entitled to any fee or commission in connection
with the transactions contemplated by this Agreement.
4.08. FINANCING. The Buyer has all of the funds required to consummate
the transactions contemplated by this Agreement.
4.09. BUYER SHARES. Upon their issuance to White in the Acquisition,
the Buyer Shares will have been duly authorized and will be legally and validly
issued, fully paid and nonassessable, subject, however, to the Escrow Agreement.
Upon their issuance to White pursuant to the Restricted Stock Grant, the
Restricted Shares will have been duly authorized by the Company. Subject to the
restrictions on transfer imposed by or described in this Agreement, upon
consummation of the Acquisition the Buyer will have transferred to White good
title to the Buyer Shares, free and clear of all Liens (other than such
restrictions).
4.10. SEC DOCUMENTS. The Buyer has heretofore provided or made
available to the Sellers copies of (i) the Buyer's Form 10-K for the year ended
December 31, 1999, (ii) the Buyer's Form 10-Q for the quarter ended March 31,
2000, (iii) all reports on Form 8-K filed by the Buyer subsequent to December
31, 1999, and (iv) the Buyer's proxy statement for its 2000 annual meeting of
stockholders (collectively, the "SEC DOCUMENTS"). The SEC Documents, as of their
respective dates, complied in all material respects with the applicable
requirements of the Securities Exchange of 1934, as amended (the "EXCHANGE
ACT"), and the rules and regulations of the Securities and Exchange Commission
promulgated thereunder, and none of the SEC Documents contained, as of their
respective dates, any untrue statement of a material fact or omitted to state a
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material fact required to be stated therein or necessary to make the statements
therein not misleading in any material respect.
ARTICLE V.
COVENANTS
5.01. CERTAIN LEGAL FEES. Following the Closing, the Company will
retain as a liability the portions and amounts of the Legal Fees set forth on
Schedule 4 as being retained by the Company, and each Seller will bear the
liability for the portions and amounts of the Legal Fees set forth opposite such
Seller's name on said Schedule 4. As contemplated by Section 1.05 hereof, such
liability of such Seller shall be discharged by an offset, in the amount of such
liability, against the Cash Consideration otherwise payable to such Seller at
the Closing.
5.02. CONFIDENTIALITY. Each of the Sellers heretofore have treated, and
hereinafter will treat, as confidential all Confidential Information. Each of
the Sellers agrees not to reveal, report, publish, disclose or transfer any
Confidential Information to any person or entity (other than the Buyer), and
further agrees that will not at any time use any Confidential Information for
any purpose other than, in the case of White, for purposes of carrying out the
Company's business. Each of Bunch and McCully hereby agree, within fifteen days
of the Closing, to return to the Company all copies of any written (or otherwise
stored, including electronically) Confidential Information (including any notes,
extracts or other documents reflecting such information) in his possession. For
the purposes of this Agreement, "CONFIDENTIAL INFORMATION" means the trade
secrets, client lists, customer preferences, computer software programs,
financial models, technology practices and other proprietary and/or confidential
information (collectively, "Confidential Information") of or relating to the
Company and its business. Confidential Information, however, shall not include
(i) any information known generally to the public or otherwise in the public
domain (other than as a result of unauthorized disclosure made or caused by any
Seller), (ii) any information generally obtainable on a non-confidential basis
from a source other than the Company or any Seller that is not itself or himself
bound by a confidentiality or non-disclosure obligation or (iii) any information
which, subsequent to the later of (x) the Closing and (y) the Seller's
termination of employment with the Company, such Seller can demonstrate was
developed without reference to Confidential Information.
5.03. NON-SOLICITATION OF EMPLOYEES. Each of the Sellers agrees that
neither he, nor any of his Affiliates (or the respective directors, officers,
employees and representatives of such Seller or any of his Affiliates), at any
time during the two-year period immediately following Closing shall, without the
prior written consent of the Buyer, directly or indirectly solicit for
employment or retention (as a consultant, independent contractor or otherwise),
employ, retain, contract with or attempt to contract with any person who was,
is, or is hereafter employed or retained by the Company or any of its
Subsidiaries or any of their successors.
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5.04. FURTHER ASSURANCES AND COOPERATION. Each of the Parties shall,
from time to time after the Closing, upon the request of any other Party and
without further consideration, execute, acknowledge and deliver in proper form
any further instruments, and take such further actions, as such other Party may
reasonably require, to carry out effectively the intent of this Agreement and
the other Acquisition Agreements. From and after the Closing, each Party shall
cooperate fully with each other Party, including, but not limited to, providing
necessary or appropriate testimony without further consideration (other than
reimbursement of reasonable expenses) in connection with any claim, action,
suit, proceeding, inquiry or investigation of a third party relating to this
Agreement or the other Acquisition Agreements, the transactions contemplated
hereby or thereby, or the conduct of the Company and its business prior to the
Closing.
5.05. PUBLIC ANNOUNCEMENTS. Neither the Buyer, on the one hand, nor any
of Sellers, on the other hand, shall issue any press release or make any public
statement with respect to this Agreement or the other Acquisition Agreements, or
the transactions contemplated hereby or thereby, without the prior consent of
the Sellers' Representative (as defined), in the case of a release or statement
by the Buyer, or of the Buyer, in the case of a release or statement by any
Seller (which consent will not be unreasonably withheld or delayed); PROVIDED,
HOWEVER, that such disclosure can be made without obtaining such prior consent
if (i) the disclosure is required by law (including filings under the Exchange
Act) or by obligations imposed pursuant to Nasdaq Stock Market regulations and
(ii) the Party making such disclosure has first used its reasonable best efforts
to consult with (but not obtain the consent of) the Buyer or the Sellers'
Representative, as the case may be, about the form and substance of such
disclosure.
5.06. WHITE EMPLOYMENT AGREEMENT; RESTRICTED SHARES. (a) Prior to the
Closing, each Seller has approved and, together with the other Sellers has
caused the Company to approve and enter into, and the Company has entered into,
a superseding employment agreement with White in the form heretofore approved by
the Buyer (the "WHITE EMPLOYMENT AGREEMENT"), with effect from and after the
time immediately prior to the Closing (the "EFFECTIVE TIME"). In connection with
the White Employment Agreement, the Buyer at the Closing shall lend White the
amount of one hundred forty-four thousand dollars ($144,000) (the "LOAN"), which
will be evidenced by a promissory note of White in the form attached as Exhibit
1 to the White Employment Agreement (the "LOAN NOTE"), and the amount of forty
thousand dollars ($40,000), which will be evidenced by a promissory note of
White in the form attached as Exhibit 2 to the White Employment Agreement (the
"SECOND LOAN NOTE"). The Loan and the Second Loan shall have the terms set forth
in the Loan Note and the Second Loan Note, respectively.
(b) In connection with the White Employment Agreement, promptly
following the Recapitalization as contemplated by Section 1.08 hereof, the Buyer
shall cause the Company to issue and sell to White a number of shares of
restricted Common Stock of the Company that represent a ten percent (10%)
interest in the outstanding Common Stock of the Company immediately after the
Closing and after giving effect to such issuance (the "RESTRICTED SHARES"). The
Restricted Shares shall be issued and sold to White pursuant to a restricted
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stock grant in the form attached hereto as EXHIBIT C (the "RESTRICTED STOCK
GRANT") and shall have the vesting, forfeiture, transfer restriction and other
terms and conditions set forth in the Restricted Stock Grant. White shall
purchase the Restricted Shares by delivery to the Buyer of (i) forty thousand
dollars ($40,000) in cash and (ii) a promissory note of White in the principal
amount of one hundred sixty thousand dollars ($160,000), which note shall be
secured by the Restricted Shares (pursuant to a separate pledge agreement if
requested by the Company) but non-recourse as to White and otherwise in the form
attached as Exhibit A to the Restricted Stock Grant (the "RESTRICTED SHARE
NOTE").
5.07. OTHER EMPLOYMENT AGREEMENTS. Prior to the Closing, each Seller,
together with the other Sellers, has caused the Company to approve and enter
into, and the Company has entered into, superseding employment agreements with
each of Ian Doull ("DOULL") and Scott Collins ("COLLINS") in the forms
heretofore approved by the Buyer (the "OTHER EMPLOYMENT AGREEMENTS"), each with
effect from and after the Effective Time.
5.08. OTHER AGREEMENTS. Prior to the Closing, each Seller has approved
and, together with the other Sellers, has caused the Company to approve and
enter into, and the Company has entered into, a non-competition agreement with
Bunch in the form heretofore approved by the Buyer (the "BUNCH NON-COMPETE
AGREEMENT"), which terminates his employment with the Company, among other
things, with effect from and after the Effective Time. At or prior to the
Closing, each Seller, together with the other Sellers, shall cause the Company
to approve and enter into a non-competition agreement with McCully in the form
heretofore approved by the Buyer (the "MCCULLY NON-COMPETE AGREEMENT" and,
together with the Bunch Non-Compete Agreement, the "NON-COMPETE AGREEMENTS"),
with effect from and after the Closing.
5.09. MUTUAL RELEASE. At or prior to the Closing, each Seller and the
Company shall enter into a mutual general release in the form attached hereto as
EXHIBIT D (the "MUTUAL Release").
5.10. CERTAIN OTHER EMPLOYMENT MATTERS. From and after the Closing, the
Buyer shall cause the Company or one of its other Affiliates to offer continued
employment, which shall be guaranteed for one year, but thereafter be on an
at-will basis, to each of the persons, at the salaries and bonuses, listed on
SCHEDULE 6 attached hereto, subject, however, to (i) such person relocating to
the Buyer's New York offices if and when the Buyer so requests and (ii) such
person executing and delivering to the Company, within ten (10) days of the
Closing, a waiver in the form attached hereto as EXHIBIT E ("WAIVER").
Notwithstanding the foregoing, the salary level set forth in Schedule 6 for any
person shall not take effect until the business day following the Company's
receipt of the Waiver for such person. After the Closing, the Buyer will
establish a separate option plan for the Company, with such terms and conditions
as the Buyer may determine (the "COMPANY OPTION PLAN"). The Buyer agrees to
cause the Company to reserve for issuance under the Company Option Plan, for
grant to existing employees of the Company (other than White, Doull and Collins)
who continue with the Company or an Affiliate of the Buyer after the Closing,
options representing in the aggregate the equivalent of a 0.5% interest in the
outstanding Common Stock of the Company immediately after the Closing. The
specific grant and allocation of such options to such employees will be
determined by White, after good faith consultation with the Buyer. From and
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after the Closing, the benefits to be provided to employees of the Company as of
the Closing who continue to be employed by the Company or an Affiliate of the
Buyer shall be the benefit plans and programs provided to similarly-situated
employees of the Buyer's Euro Brokers Inc. Affiliate.
5.11. INTELLECTUAL PROPERTY. At the Closing, each Seller shall execute
and deliver to the Company, and White shall cause Consultant to execute and
deliver to the Company, assignments in the form attached hereto as EXHIBIT F
(the "AGREEMENT AS TO RIGHTS") of all of the respective results and proceeds of
their respective efforts and services heretofore provided to or on behalf of the
Company, including, but not limited to, all software, source code, object code,
designs, architecture and works, and all materials related thereto or derived
therefrom, in whatever stage of completion as may exist (the "Property"). After
the Closing, each Seller and Consultant will, at the request of the Company, do
all acts and things as may be necessary to vest the entire right, title and
interest in the Property throughout the world in the Company and secure to the
Company the full benefit of the same, including, but not limited to, executing
any further necessary instruments and providing testimony in any proceeding
challenging the Company's ownership of the Property.
5.12. ASSUMPTION OF CERTAIN LIABILITIES. At or prior to the Closing,
each of the Sellers will expressly assume, severally in accordance with their
Pro Rata Percentages and not jointly, and pursuant to an assumption agreement
substantially in the form attached hereto as EXHIBIT G ("ASSUMPTION AGREEMENT"),
seventy percent (70%) in the aggregate of the specified liabilities of the
Company set forth on part one of SCHEDULE 7 (the "SPECIFIED LIABILITIES"), and
each Seller agrees otherwise to comply with the provisions of part two of
Schedule 7 with respect to the Specified Liabilities. The thirty percent (30%)
of the Specified Liabilities set forth on part one of Schedule 7 shall,
following the Closing, be retained by the Company, and the Buyer shall otherwise
comply, and cause the Company to comply, with the provisions of part two of
Schedule 7 with respect to the Specified Liabilities.
5.13. CERTAIN TAX MATTERS. The Buyer shall cause the Company to
prepare, or cause to be prepared, in consultation with the Sellers'
Representative, at the Company's own expense, and timely file or cause to be
filed all required Tax Returns with respect to any taxable period ending on or
prior to the Closing Date. All such returns shall be prepared and all elections
with respect to such returns shall be made, to the extent permitted by Law, in a
manner consistent with prior practice. Before filing any Tax Return with respect
to any such pre-Closing period, the Buyer shall cause the Company to provide
Sellers' Representative with, or cause to be provided, a copy of such Tax
Return, and a reasonable opportunity to comment thereon, at least thirty
business days prior to the last date for timely filing such Tax Return (giving
effect to any valid extensions thereof). The Buyer agrees to cause the Company
to incorporate, or cause to be incorporated, in such Tax Return any reasonable
and lawful comments, consistent with prior practice, of the Sellers'
Representative that are provided to the Buyer within twenty business days of
such receipt, provided that the incorporation thereof does not unnecessarily
materially prejudice the Buyer or any of its consolidated Affiliates. Each
Seller shall be responsible to pay his Pro Rata Percentage of all Taxes related
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to any such Tax Return to the extent that such Taxes are with respect to any
taxable period (or portion thereof) ending on or prior to the Closing Date.
5.14. BUYER SHARES. White hereby agrees and acknowledges that he will
not sell, transfer, pledge or otherwise dispose of the Buyer Shares for a period
of one year following the Closing, and that the Buyer Share Certificates will be
legended to such effect, as set forth in Section 1.06(b); provided, however,
that during such period White may transfer the Buyer Shares in a private
transaction to a Permitted Transferee who, prior to such transfer, agrees in
writing to be bound by the provisions of this Section 5.14 and, if the transfer
relates to Buyer Shares held in escrow, of the Escrow Agreement. A "PERMITTED
TRANSFEREE" is a person who (i) acquires the Buyer Shares by will or by the laws
of descent and distribution, (ii) is a member of White's immediate family or a
trust established for his or their benefit, or (iii) a partnership, limited
liability company, corporation or other entity if all of the beneficial owners
thereof are White, members of his immediate family or trusts for his or their
benefit. Following such one-year period, the Buyer, at the request of White,
shall cause its transfer agent to issue, reasonably promptly upon White's
request, substitute Buyer Share Certificates to White, without such legend
(although still with the legend set forth in Section 1.06(a) until such time as
it is demonstrated that such shares may be sold pursuant to Rule 144(k)
promulgated under the Securities Act).
5.15. DEFERRED SALARY PAYMENT. At the Closing, the Buyer shall, or
cause the Company to, pay Bunch, in his capacity as an officer of the Company,
the amount of twenty-seven thousand twenty-eight and forty-seven one hundredths
dollars ($27,028.47), representing the net amount, after applicable withholdings
(which the Buyer shall cause the Company to forward in timely fashion to the
appropriate taxing authorities), of a deferred salary obligation in the gross
amount of fifty thousand dollars ($50,000) owed to Bunch by the Company (the
"DEFERRED SALARY OBLIGATION"), which payment Bunch agrees shall be in full
settlement of any and all deferred salary obligations of the Company to Bunch.
White hereby acknowledges that the Company does not owe him, or that he has
irrevocably waived, any deferred salary obligations.
5.16. CERTAIN OTHER AGREEMENTS. Neither the execution of this Agreement
or any other Acquisition Agreement, nor the occurrence of the Closing, shall
modify, supersede or otherwise affect either (i) the Confidentiality Agreement,
dated April 22, 1999, between the Buyer and the Company, and to which each
Seller has separately agreed in an addendum of the same date (collectively, the
"CONFIDENTIALITY AGREEMENTS") or (ii) the Letter Agreement, dated August 24,
1999, between the Buyer's Affiliate, Maxcor Information Inc. ("MII") and the
Company (the "LICENSE AGREEMENT"), each of which will remain in full force and
effect in accordance with their respective terms; provided, however, that from
and after the Closing MII and the Company shall have full and sole right and
discretion to terminate, modify, sell or otherwise transfer the License
Agreement in any manner that they see fit; and provided, further, that from and
after the Closing, the related letter agreement of the same date as the License
Agreement between MII and the Sellers shall be deemed terminated and superseded
by (x) in the case of White, the White Employment Agreement and (y) in the case
of Bunch and McCully, the Non-Compete Agreements.
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5.17. SETTLEMENT AGREEMENT. McCully hereby represents, warrants and
agrees that, from and after the Closing (i) none of the Company, White or Bunch
shall have any obligation or liability of any kind and description and however
arising (regardless of whether such liability relates to acts or omissions
occurring prior to the Closing) to him under paragraph 10 of the certain
settlement agreement, dated May 19, 2000, between McCully, on the one hand, and
the Company and White and Bunch, on the other hand (the "SETTLEMENT AGREEMENT"),
and (ii) the Settlement Agreement shall be, and hereby is, deemed amended to
delete said paragraph 10 in its entirety.
5.18. SOURCE CODE. At the Closing, the Sellers shall cause the Company
to deliver to the Buyer, in a readable, electronic file format, the source code
for the electronic, Brady bond dealing system currently deployed under license
to the Buyer's inter-dealer brokerage affiliate (the "SOURCE CODE"). Within ten
(10) days of the Closing, White shall cause to be delivered to the Buyer, in a
readable, electronic file format, the source code for all other material
Proprietary Software.
ARTICLE VI.
SURVIVAL; INDEMNIFICATION; DISPUTES1
6.01. SURVIVAL. The representations and warranties of the Parties
contained in this Agreement or in any certificate or other writing required to
be delivered pursuant hereto shall survive the Closing (i) with respect to the
representations and warranties described in Sections 2.01, 2.02, 3.06 and 4.09,
without limitation, (ii) with respect to the representations and warranties
described in Sections 2.07, 3.15, 3.16, 3.18 and 4.07, until the date thirty
days following the date on which the applicable statute of limitations has
expired, including any extensions thereto, and (iii) with respect to any other
representations and warranties set forth in Articles II, III and IV, until
eighteen months from the Closing Date. If written notice of a claim has been
given prior to the expiration of the applicable representations and warranties
by the Party seeking indemnification for such claim, then the relevant
representations and warranties of the other Party or Parties shall survive as to
such claim, until such claim has been finally resolved. The covenants and
agreements of the Parties contained in this Agreement or in any certificate or
other writing required to be delivered pursuant hereto shall survive the Closing
only to the extent contemplated by the terms thereof.
6.02. INDEMNIFICATIONS. (a) Subject to the limitations and procedures
described herein, each of the Sellers, severally but not jointly, shall
indemnify and hold harmless, the Buyer, its subsidiaries (including the
Company), its controlling persons, the respective directors, officers, employees
and agents of any of the foregoing and each of the heirs, executors, successors
and permitted assigns of any of the foregoing (each, a "BUYER INDEMNITEE"), from
and against any and all claims, losses, liabilities, damages, costs, penalties,
fines, costs and expenses (including reasonable attorneys' fees and expenses)
(collectively, "DAMAGES"), incurred or suffered by a Buyer Indemnitee resulting
from or arising out of (i) an inaccuracy in any of the representations and
warranties of such Seller set forth in Article II, (ii) an inaccuracy in any of
the representations and warranties of the Sellers set forth in Article III,
(iii) a breach by such Seller of any covenant or agreement of such Seller
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contained in this Agreement, (iv) such Seller's failure to pay his share, based
on his Pro Rata Percentage, of the costs and expenses that are the
responsibility of the Sellers under Section 7.04 and/or (v) such Seller's
failure to pay his share of the Specified Liabilities assumed by the Sellers
under the Assumption Agreement as set forth therein.
(b) Subject to the limitations and procedures described herein, the
Buyer shall indemnify and hold harmless each Seller, and each of the heirs,
executors, successors and permitted assigns thereof (each, a "SELLER INDEMNITEE"
and, together with a Buyer Indemnitee, an "INDEMNITEE"), from and against any
and all Damages incurred or suffered by a Seller Indemnitee resulting from or
arising out of (i) an inaccuracy in any of the representations and warranties of
the Buyer set forth in Article IV, (ii) a breach by the Buyer of any covenant or
agreements of the Buyer contained in this Agreement and/or (iii) costs and
expenses that are the responsibility of the Buyer under Section 7.04.
(c) No individual Seller's indemnification obligation for Damages under
Section 6.02(a)(ii) shall exceed such Seller's Pro Rata Percentage of such
Damages.
(d) No Seller shall be liable for Damages resulting from (i) the
inaccuracy of a representation or warranty which is given individually by
another Seller or (ii) a breach of a covenant which is the individual obligation
of another Seller.
(e) The indemnification by any Seller in favor of the Buyer Indemnitees
contained in Sections 6.02(a)(i) and 6.02(a)(ii), other than with respect to an
inaccuracy of such Seller's representations in Sections 2.01, 2.02, 2.07, 3.06,
3.07(c) or 3.15, shall not be effective until the aggregate dollar amount of all
Damages indemnified against under such Sections by such Seller exceeds his Pro
Rata Percentage of fifty thousand dollars ($50,000) (for each Seller, a
"THRESHOLD AMOUNT"), and then only to the extent such aggregate amount exceeds
such Seller's Threshold Amount. In addition, the indemnification by any Seller
in favor of the Buyer Indemnitees contained in Sections 6.02(a)(i) and
6.02(a)(ii) (other than with respect to an inaccuracy of such Seller's
representations in Sections 2.01, 2.07, 3.06 or 3.15, which shall not have a
limitation) shall terminate once the dollar amount of all Damages indemnified
under such Sections by such Seller exceeds his Pro Rata Percentage of two
million, six hundred sixty-seven thousand dollars ($2,667,000).
(f) The indemnification by the Buyer in favor of the Seller Indemnitees
contained in Section 6.02(b)(i), other than with respect to an inaccuracy of the
Buyer's representations in Sections 4.07 or 4.09, shall not be effective until
the aggregate dollar amount of all Damages indemnified against under such
Section exceeds fifty thousand dollars ($50,000) (the "BUYER'S THRESHOLD
AMOUNT"), and then only to the extent such aggregate amount exceeds the Buyer's
Threshold Amount. In addition, the indemnification by the Buyer in favor of the
Seller Indemnitees contained in Section 6.02(b)(i) (other than with respect to
an inaccuracy of the Buyer's representations in Sections 4.07 or 4.09, which
shall not have a limitation) shall terminate once the dollar amount of all
Damages indemnified under such Sections exceeds two million, six hundred
sixty-seven thousand dollars ($2,667,000).
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(g) Any recovery made by a Buyer Indemnitee under this Article VI shall
be first made from the Escrow Amount in the manner described herein and in the
Escrow Agreement and after the Escrow Agreement has terminated, or in the event
that the Escrow Amount is insufficient, recovery may be made against the Sellers
in any manner permitted by Law, subject to the limitations of Sections 6.02(c),
6.02(d), 6.02(e) and 7.12.
(h) For purposes of this Article VI, White may use any and all of the
Buyer Shares received by him to satisfy any of his indemnification obligations
to the Buyer. For such purposes, each Buyer Share shall be valued at the average
of the last sale prices for the Buyer Common Stock, as reported by Nasdaq, for
the five (5) most recent trading days on which a sale of the Buyer Common Stock
occurred preceding the date of the notice from the Buyer asserting its claim (x)
for indemnification under this Agreement and/or (y) for release of any of the
Escrow Amount under the Escrow Agreement.
6.03. PROCEDURES; REMEDIES. (a) In order for an Indemnitee to be
entitled to any indemnification provided for under Section 6.02 in respect of,
arising out of or involving a claim made by any Person against an Indemnitee (a
"THIRD PARTY CLAIM"), such Indemnitee must notify the Party or Parties from whom
indemnification is being sought (the "INDEMNIFYING PARTY") in writing of the
Third Party Claim promptly following receipt by such Indemnitee of written
notice of the Third Party Claim; provided, however, that failure to give such
notification shall not affect the indemnification provided hereunder except to
the extent the Indemnifying Party shall have been materially prejudiced as a
result of such failure. Thereafter, such Indemnitee shall deliver to the Buyer
(if it is the Indemnifying Party) or to each of the Sellers who is an
Indemnifying Party, upon such Indemnitee's receipt thereof, copies of all
notices and documents (including court papers) received by such Indemnitee
relating to the Third Party Claim that are not separately addressed to the
Indemnifying Party.
(b) If a Third Party Claim is made against an Indemnitee, the
Indemnitee shall defend and control the defense of the Third Party Claim with
counsel of its choice, but the Indemnifying Party shall be entitled to
participate in (but not control) the defense thereof, at the Indemnifying
Party's cost and expense, with counsel reasonably acceptable to the Indemnitee.
Notwithstanding the foregoing, it is understood that with respect to any Third
Party Claim against both a Buyer Indemnitee and one or more Sellers, the Buyer
Indemnitee shall be entitled to defend and lead the defense thereof with counsel
of its choice, but each such Seller shall also be entitled to participate in the
defense thereof, at such Seller's cost and expense, with counsel of his choice.
Each of the Parties shall fully cooperate in the defense of any Third Party
Claim, including, but not limited to, the retention and, upon request of the
Indemnitee, the provision to the Indemnitee of records and information that are
relevant to the Third Party Claim if not already in the Indemnitee's possession,
at the Indemnifying Party's expense. Damages shall not include the fees and
expenses of more than one firm of attorneys (plus one local counsel) for all
Indemnitees with respect to any single Third Party Claim.
(c) In its defense of a Third Party Claim, the Indemnitee shall not
admit any liability with respect to, or settle, compromise or discharge (a
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"SETTLEMENT"), such Third Party Claim without the prior written consent of the
Indemnifying Party (which consent shall not be unreasonably delayed or
withheld). If the Indemnifying Party gives such consent, the Indemnifying Party
shall be responsible for all Damages related to the Settlement. If the
Indemnifying Party withholds or delays such consent, the Indemnitee shall
nevertheless be entitled to proceed with and enter into the Settlement, and the
issue of whether the Indemnifying Party's consent was reasonably withheld or
delayed, taking into account (i) whether the Indemnifying Party has liability
for all or any portion of such Third Party Claim under Section 6.02 of this
Agreement, disregarding solely for these purposes Sections 6.02(e) and (f)
hereof ("SECTION 6.02 LIABILITY"), and (ii) if the Indemnifying Party has any
Section 6.02 Liability (as determined by the Panel (as defined) pursuant to
Section 7.12 hereof), (x) the amount of the proposed Settlement and the existing
and anticipated costs (monetary and otherwise) of defending and potentially
incurring liability with respect to the Third Party Claim and (y) the defenses
and counterclaims available to the Indemnitee (clauses (i) and (ii),
collectively, the "STANDARDS"), shall, at the request of either the Indemnifying
Party or the Indemnitee, be submitted to arbitration pursuant to Section 7.12
hereof. If the Panel determines that the Indemnifying Party has no Section 6.02
Liability, the Indemnifying Party's failure to consent shall be deemed
reasonable and the Indemnifying Party shall have no obligation to the Indemnitee
with respect thereto. If the Panel determines that the Indemnifying Party has
some Section 6.02 Liability and that consent was unreasonably withheld or
delayed, taking into account the Standards, then the amount of the Settlement
that the Panel determines relates to the Section 6.02 Liability, plus any
additional costs resulting from such withholding and/or delay, shall be borne by
the Indemnifying Party. If the Panel determines that the Indemnifying Party has
some Section 6.02 Liability and that consent was not unreasonably withheld or
delayed, taking into account the Standards, then the Panel shall also determine
the amount, if any, of a settlement less than the Settlement to which the
Indemnifying Party could not have reasonably withheld its consent, taking into
account the Standards and the extent to which the Indemnifying Party had Section
6.02 Liability, and such amount shall be borne by the Indemnifying Party, and
any amounts of the Settlement in excess thereof borne by the Indemnitee. In
connection with any request that the Indemnifying Party consent to a proposed
Settlement, the Indemnitee shall provide the Indemnifying Party, at the
Indemnifying Party's expense, with such records and information in the
Indemnitee's possession (and not already in the Indemnifying Party's possession)
as the Indemnifying Party or its counsel may reasonably request for purposes of
evaluating the Third Party Claim and the proposed Settlement, subject to the
signing of an appropriate confidentiality and/or joint defense agreement. If the
Indemnifying Party withholds its consent to the proposed Settlement, the
Indemnifying Party shall at such time inform the Indemnitee in writing whether
the withholding relates to (i) the Indemnifying Party's belief that it does not
have any Section 6.02 Liability with respect to the Third Party Claim, (ii) the
Indemnifying Party's belief that the Settlement, disregarding whether or not the
Indemnifying Party has any Section 6.02 Liability, is not a reasonable
settlement or (iii) both of the foregoing. In no event shall the Panel have any
authority to modify, and no award by the Panel shall be enforced, to the extent
that it is not in accordance with Sections 6.02(e) and (f) of this Agreement.
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(d) Notwithstanding the foregoing, in the event that a Third Party
Claim is brought against both the Indemnifying Party and the Indemnitee, the
Indemnitee may only proceed with or enter into any Settlement without the prior
written consent of the Indemnifying Party if such Settlement (x) includes a
release from the Person bringing the Third Party Claim of the Indemnifying Party
in connection with the Third Party Claim to the same extent as the Indemnitee is
being released and (y) does not include any admission of fault, culpability or a
failure to act by or on behalf of, or impose any obligations or restrictions
upon, the Indemnifying Party.
(e) In the event an Indemnitee should have a claim with respect to
which the Indemnitee desires to seek indemnity pursuant to Section 6.02 that
does not involve a Third Party Claim being asserted against or sought to be
collected from the Indemnitee, the Indemnitee shall deliver notice of such claim
with reasonable promptness to the Indemnifying Party and, if the claim is
against any Seller and the Escrow Agent is holding any of the Escrow Amount (or
funds or property derived therefrom), the Escrow Agent. Such notice shall be
signed by the Party issuing the notice, shall state (i) the name of the Party
against whom the claim is being made, (ii) the amount claimed against such Party
and (iii) a statement setting forth the basis for the claim in reasonable
detail, and, if notice is being given to the Escrow Agent, and shall otherwise
comply with the requirements of the Escrow Agreement. The failure by the
Indemnitee so to notify the Indemnifying Party shall not affect any recovery to
which the Indemnitee may be entitled pursuant to Section 6.02, except to the
extent that the Indemnifying Party shall have been materially prejudiced by such
failure and except that, if notice is not received by the Escrow Agent by 5:00
p.m. New York City time on August 10, 2001, no claim may be made against such
property held by the Escrow Agent.
(f) Following the Closing, the sole and exclusive remedy of the Buyer,
on the one hand, and the Sellers, on the other hand, with respect to any and all
monetary claims arising from any breach of this Agreement by the other shall be
pursuant to the indemnification provisions set forth in this Article VI, the
Escrow Agreement and the arbitration provisions of Section 7.12. Nothing in this
Article VI, the Escrow Agreement or Section 7.12, however, is intended to limit
the rights and remedies available to any Party for a claim of common law fraud.
ARTICLE VII.
MISCELLANEOUS
7.01. NOTICES. Any notice or other communication required or which may
be given hereunder shall be in writing and shall be delivered personally, by
facsimile or e-mail (if receipt is confirmed by the recipient) or sent by
messenger or overnight courier service which provides evidence of delivery or by
certified or registered mail, return receipt requested, postage prepaid, and
shall be deemed given when received, as follows:
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If to the Buyer, to:
Maxcor Financial Group Inc.
2 World Trade Center, 84th floor
New York, NY 10048
Attn: General Counsel
Facsimile: (212) 748-7979
E-mail: [email protected]
If to the Sellers, to:
c/o Roy M. Korins, Esq.
Esanu Katsky Korins & Siger, LLP
605 Third Avenue
New York, NY 10158
Facsimile: (212) 953-6899
E-mail: [email protected]
with a copy to McCully
If to White or Bunch, to:
c/o Roy M. Korins, Esq.
Esanu Katsky Korins & Siger, LLP
605 Third Avenue
New York, NY 10158
Facsimile: (212) 953-6899
E-mail: [email protected]
If to McCully, to:
c/o Jonathan Lapin, Esq.
575 Madison Avenue
Suite 2514
New York, NY 10022
Facsimile: (212) 755-6385
E-mail: [email protected]
7.02. SELLERS' REPRESENTATIVE. Each Seller hereby irrevocably appoints
White (the "SELLERS' REPRESENTATIVE") as his agent and true and lawful
attorney-in-fact to act in the name of and for and on behalf of each Seller in
connection with Sections 5.05 and 5.13 of this Agreement, and the Buyer shall
have the absolute right and authority to rely upon the acts taken or omitted to
be taken by the Sellers' Representative on behalf of the Sellers in connection
with such Sections, without any duty to inquire as to the acts and omissions of
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the Sellers' Representative. The Sellers' Representative shall not be liable to
any of the Sellers or their Affiliates for any decisions made or actions taken
by the Sellers' Representative in good faith, absent gross negligence by the
Sellers' Representative, but shall use his good faith efforts to provide
reasonably contemporaneous notice to the other Sellers of any material actions
taken by him under Section 5.13.
7.03. AMENDMENTS AND WAIVERS. Any provision of this Agreement may be
amended or waived if, but only if, such amendment or waiver is in a writing
specifically referencing this Agreement and is signed, in the case of an
amendment, by each Party, or in the case of a waiver, by the Party against whom
the waiver is to be effective. No delay on the part of any Party in exercising
any right, power or privilege hereunder shall operate as a waiver thereof, nor
shall any waiver on the part of any Party of any such right, power or privilege,
or any single or partial exercise of any such right, power or privilege,
preclude any further exercise thereof or the exercise of any other such right,
power or privilege.
7.04. COSTS AND EXPENSES. Except as otherwise provided herein, all
costs and expenses of the Company and the Sellers incurred in connection with
this Agreement and the Closing shall be borne and paid by the Sellers, and all
costs and expenses of the Buyer in connection with this Agreement and the
Closing shall be borne and paid by the Buyer. Transfer taxes, if any, in
connection with the sale and transfer of the Shares to the Buyer shall be borne
and paid by the Sellers.
7.05. SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall be
binding upon and inure to the benefit of the Parties and their respective heirs,
successors, legal representatives and permitted assigns; provided, however, that
no Party may assign, delegate or otherwise transfer any of its rights or
obligations under this Agreement without the consent of each other Party, except
that the Buyer may designate, without the consent of any other Party, any of its
wholly owned subsidiaries as the entity to perform its rights and obligations
hereunder, including, but not limited to, the purchase of the Shares and/or the
Notes, but no such designation shall relieve the Buyer of its obligation to
cause delivery of the Buyer Shares and the Restricted Shares and payment of the
Consideration, the Note Consideration and other amounts at the Closing.
7.06. ENTIRE AGREEMENT. This Agreement, together with the exhibits and
schedules hereto and the other instruments referred to herein, the
Confidentiality Agreements and the License Agreement, embody the entire
agreement of the Parties with respect to the subject matter hereof and supersede
all prior agreements and understandings, whether written or oral, including the
letter agreement, dated June 15, 2000, as heretofore amended, by and among the
Buyer, the Company, Consultant and the Sellers. No representation, inducement,
promise, understanding, condition or warranty not set forth herein has been made
or relied upon by any Party.
7.07. INTERPRETATION. Unless otherwise specified, references contained
in this Agreement to a Section, Article, Exhibit or Schedule shall be to
Sections, Articles, Exhibits and Schedules of or to this Agreement. Unless the
context otherwise requires, references to "herein" or "hereof" shall be
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construed as referring to the entire Agreement, and not solely to the specific
Section or paragraph in which they appear. References herein to "the Sellers'
knowledge" or "the knowledge of the Sellers" or equivalent phrases shall mean to
the knowledge of any of the Sellers, after due inquiry.
7.08. JOINT DRAFTING. Each of the Parties has been represented by
counsel in connection with this Agreement and the other Acquisition Agreements
and has participated in the drafting of this Agreement and the other Acquisition
Agreements. Accordingly, neither this Agreement nor any of the other Acquisition
Agreements shall be interpreted against or in favor of any of the Parties on the
basis that any of the Parties participated or did not participate in the
drafting hereof or thereof.
7.09. REMEDIES; ATTORNEYS' FEES. Except as set forth in Article VI and
Section 7.12, the rights and remedies herein provided are cumulative and are not
exclusive of any rights or remedies that any party may otherwise have at law or
in equity. In the event of any breach of this Agreement or any other Acquisition
Agreement by the Buyer (or, after the Closing, the Company), on the one hand, or
by any of the Sellers (or, prior to the Closing, the Company), on the other
hand, the non-breaching party shall be entitled, in addition to any other right
and remedy it may have, at law or in equity, to an injunction, without the
posting of any bond or other security, enjoining or restraining such breach. In
any action seeking an injunction to enforce or prevent the breach of this
Agreement or any other Acquisition Agreement, the prevailing party in such
action (or the party that prevails with respect to the preponderance of
substantive claims in such action ) shall be entitled to recover all of its
reasonable costs and expenses, including reasonable attorneys' fees (including
reasonable allocations of the costs of any in-house counsel), that are
reasonably attributable to the claims as to which it has prevailed.
7.10. SEVERABILITY. Whenever possible, each provision of this Agreement
and each other Acquisition Agreement shall be interpreted in such a manner as to
be effective and valid under all applicable laws. However, in the event that any
such provision or portion thereof shall be held by an arbitrator or court of
competent jurisdiction to be invalid, illegal or unenforceable by reason of its
duration, geographical scope, extent or otherwise (the "INVALID PROVISION"),
then it is the specific intent of the Parties that (i) for purposes of the
application of the Invalid Provision in such instance, the Invalid Provision
shall be deemed modified to the extent, but only to the extent, of such
invalidity, illegality or unenforceability, (ii) the Invalid Provision be
enforced in its remaining form (e.g., with reduced duration, geographical scope,
extent, etc., as the case may be), (iii) a suitable and equitable provision be
substituted for the modified portion of the Invalid Provision in order to carry
out, so far as may be valid and enforceable, the intent and purpose of such
modified portion, (iv) the interpretation or application of the Invalid
Provision in any other instances, under any other laws or jurisdictions or to
any other circumstances shall not be affected thereby and (v) all other
provisions of this Agreement and each other Acquisition Agreement shall remain
in full force and effect, and not be affected by such invalidity, illegality or
unenforceability of the Invalid Provision or any modification thereof or
substitution therefor.
7.11. COUNTERPARTS; THIRD PARTY BENEFICIARIES. This Agreement may be
signed in any number of counterparts, each of which shall be an original, with
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the same effect as if the signatures thereto and hereto were upon the same
instrument. Executed counterparts of this Agreement may be delivered by
facsimile transmission. Except for an Indemnitee under Article VI, no provision
of this Agreement is intended to confer upon any Person other than the Parties,
and their respective heirs, successors, legal representatives and permitted
assigns, any rights or remedies hereunder.
7.12. ARBITRATION OF DISPUTES. (a) For purposes of this Section 7.12,
references to "Acquisition Agreement" or "Acquisition Agreements" shall only be
deemed to mean this Agreement, the Escrow Agreement and/or the Assumption
Agreement. Except as provided in this Section 7.12, and except to the extent any
Party may be entitled to the remedy of specific performance or other injunctive
relief with respect to any covenant or other agreement contained in this
Agreement or any of the other Acquisition Agreements, any disagreement, dispute,
controversy or claim arising out of or relating to this Agreement, any of the
other Acquisition Agreements or the interpretation hereof or thereof or any
arrangements relating hereto or thereto or contemplated herein or therein, or
the breach, termination or invalidity hereof or thereof, including, but not
limited to, the determination as to whether the representations and warranties
of any Party are inaccurate or whether any Party has breached its or his
covenants or as to the reasonableness of any consent withheld or delayed under
Section 6.03 hereof, shall be settled exclusively and finally by arbitration. It
is specifically understood and agreed that any disagreement, dispute or
controversy which cannot be resolved between the relevant Parties may be
submitted to arbitration irrespective of the magnitude thereof, the amount in
controversy or whether such disagreement, dispute or controversy would otherwise
be considered justiciable or ripe for resolution by a court or arbitral
tribunal.
(b) The arbitration shall be conducted in accordance with the
commercial arbitration rules of the American Arbitration Association (the
"ARBITRATION RULES"), except as those rules conflict with the provisions of this
Section 7.12, in which event the provisions of this Section 7.12 shall control.
The arbitral tribunal shall consist of a three arbitrators, at least one of whom
shall be an attorney with significant experience in commercial purchase and sale
of business transactions, chosen in accordance with the Arbitration Rules (the
"PANEL"). The arbitration shall be held and conducted in the borough of
Manhattan, New York.
(c) Any decision or award of the Panel shall be final and binding upon
the parties to the arbitration proceeding. The Parties hereby waive to the
extent permitted by law any rights to appeal or to review of such award by any
court or tribunal. The Parties agree that the Panel's award may be enforced
against the parties to the arbitration proceeding or their assets wherever they
may be found and that a judgment upon the Panel's award may be entered in any
court having jurisdiction thereof.
(d) Conformity to the legal rules of evidence shall not be required in
the arbitration. At any oral hearing of evidence in connection with the
arbitration, each party thereto or its legal counsel shall have the right to
examine its witnesses and to cross-examine the witnesses of any opposing party.
No evidence of any witness shall be presented in written form unless the
opposing party or parties shall have the opportunity to cross-examine such
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witness, except as the parties to the proceeding otherwise agree in writing or
except under extraordinary circumstances where the interests of justice require
a different procedure.
(e) The Panel shall, to the extent reasonably practicable, hold and
conduct all proceedings under this Section 7.12 (including any discovery agreed
upon by the parties or permitted by the Panel) on a reasonably expedited basis,
consistent with the intention of the Parties that any disputes between or among
them be resolved promptly. The decision of the Panel shall be issued in writing,
with reasonable supporting detail as to the reasons underlying the decision, not
later than thirty days after the submission of final written arguments by the
parties to the proceeding and/or the conclusion of a hearing, if any, held by
the Panel. The decision of the Panel shall be made in accordance with the
standards set forth in this Section 7.12 and in the Acquisition Agreement or
Acquisition Agreements that are the subject of the dispute, and the Panel,
except as contemplated by Section 7.10 hereof, shall have no power to modify or
amend this Agreement or any of the other Acquisition Agreements.
(f) In connection with its decision, the Panel shall be required (i) to
declare one Party as the "prevailing party" with respect to the proceeding,
either because it prevailed as to all matters at issue in the proceeding or
because it prevailed with respect to the preponderance of the substantive
matters at issue in the proceeding, (ii) to require the other parties to the
arbitration to reimburse such "prevailing party" for all of its reasonable costs
and expenses, including reasonable attorney's fees and expenses (including
reasonable allocations of the costs of any in-house counsel), incurred in
connection with such proceeding that are reasonably attributable to the matters
as to which it has prevailed, and (iii) to allocate all of the costs of the
Panel to the party that is not the "prevailing party." This requirement is set
forth in accordance with the intention of the Parties that where one of them was
correct at the outset and should not have been required to incur the expense of
an arbitral proceeding, the other party or parties to the proceeding should pay
those expenses. Notwithstanding the foregoing, allocations of costs among any
Sellers that are parties to the proceeding shall be consistent with their Pro
Rata Percentages.
(g) This Section 7.12 shall not prohibit or limit in any way a Party
from seeking or obtaining preliminary or interim injunctive or other equitable
relief from a court for a breach or alleged breach of any of the covenants and
agreements contained in this Agreement or any other Acquisition Agreement. Any
court order obtained by a Party requiring performance of any such covenant or
agreement shall remain in effect until dissolved or modified by the court or
until superseded by an arbitral award.
7.13. GOVERNING LAW; JURISDICTION. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK, WITHOUT
REGARD TO THE CONFLICTS OF LAW RULES OF SUCH STATE, PROVIDED, HOWEVER, THAT ANY
ARBITRATION UNDERTAKEN IN ACCORDANCE WITH SECTION 7.12 HEREOF SHALL BE GOVERNED
IN ALL RESPECTS EXCLUSIVELY BY THE PROVISIONS OF SAID SECTION 7.12 AND THE
ARBITRATION RULES. Notwithstanding the foregoing, a Party may seek judicial
injunctive relief pursuant to Section 7.09 hereof, and each of the Parties, for
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purposes of seeking and obtaining such injunctive relief and/or for purposes of
enforcement of an award of the Panel, hereby (i) submits to the jurisdiction of
the courts of New York State in and for New York County and/or any Federal court
held therein, which jurisdiction shall be exclusive for purposes of seeking such
injunctive relief and non-exclusive for purposes of enforcing an award of the
Panel, and (ii) irrevocably consents to the exercise of personal jurisdiction
over such Party by such courts, agrees that venue shall be proper in such courts
and irrevocably waives and releases any and all defenses in such courts based on
lack of personal jurisdiction, improper venue and/or forum non conveniens. Each
Party hereby consents to process being served in any such action or proceeding
by the delivery of a copy thereof to the address set forth in Section 7.01 above
by certified or registered mail, return receipt requested, or by messenger or
overnight delivery service which provides evidence of delivery, and agrees that
such service upon receipt shall constitute good and sufficient service of
process or notice thereof. Nothing in this Section 7.13 shall affect or
eliminate any right to serve process in any other matter permitted by Law.
7.14. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO IRREVOCABLY
WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
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IN WITNESS WHEREOF, this Agreement has been executed on behalf of each
of the Parties as of the day and year first above written.
MAXCOR FINANCIAL GROUP INC.
By: /s/ KEITH E. REIHL
--------------------------------
Keith E. Reihl,
Chief Financial Officer
the Sellers:
/s/ DANIEL A. WHITE
------------------------------------
Daniel A. White
/s/ JOHN P. BUNCH
------------------------------------
John P. Bunch
/s/ ROBERT MC CULLY
------------------------------------
Robert McCully
Solely for purposes of Section 5.16:
MAXCOR INFORMATION INC.
By: /s/ KEITH E. REIHL
--------------------------------
Keith E. Reihl,
Chief Operating Officer
37
