EXHIBIT 10.2
STOCK PURCHASE AGREEMENT,
DATED AS OF AUGUST 2, 2005,
BY AND AMONG
JOHN ERMILIO,
HADDON STRATEGIC ALLIANCES, INC.
AND
NATIONAL INVESTMENT MANAGERS INC.
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of August 2, 2005 (this
"Agreement"), by and among HADDON STRATEGIC
ALLIANCES, INC., a New Jersey
corporation (the "Company"), JOHN ERMILIO
(the "Shareholder"), and NATIONAL
INVESTMENT MANAGERS INC., a Florida
corporation (the "Purchaser").
RECITALS:
A. The
Shareholder is the owner of 250 issued and outstanding shares
of
common stock of the Company, par value
$0.01 per share (the "Shares").
B. The
Shareholder desires to sell and transfer to the Purchaser, and
the
Purchaser desires to purchase and acquire,
all of the Shareholder's right, title
and interest in and to the Shares, all on
the terms and provisions and subject
to the conditions set forth herein.
C. This
Agreement shall constitute a plan of reorganization under
Section
368(a)(1)(B) of the Internal Revenue Code
of 1986, as amended.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein, and other good
and valuable consideration, the
receipt and legal adequacy of which is
acknowledged, the parties agree as
follows:
Article I
DEFINITIONS
The terms defined in this Article I, whenever used in this
Agreement
(including, without limitation, the
exhibits and schedules attached hereto),
shall have the following meanings:
1.1
"Accounts Receivable" means all trade accounts receivable and
all
notes, bonds and other evidences of
indebtedness of and rights to receive
payment, including, without limitation,
rebates, refunds and similar payments
and any rights of the Company with respect
to any third party collection
procedures or any other actions or
proceedings relating to the Business (as
defined below) which have been commenced in
connection therewith and any other
item that would be characterized as an
account receivable in accordance with
GAAP (as such term is hereinafter
defined).
1.2
"Acquisition Transaction" has the meaning given such term in
Section
6.9 of this Agreement.
1.3
"Affiliate" of any Person (as such term is hereinafter defined)
means
any stockholder, member, Person or entity
controlling, controlled by or under
common control with such Person, or any
director, officer or Key Employee (as
defined below) of such Person, or, with
respect to a Shareholder, any of the
immediate family members of the Shareholder
who were at any time employed by the
Company. For purposes of this definition,
the term "control", when used with
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respect to any Person, means the power to
direct the management and policies of
such Person, directly or indirectly,
whether through the ownership of voting
securities, by contract or otherwise; and
the terms "controlling" and
"controlled" shall have meanings that
correspond to the foregoing.
1.4
"Authorizations" means all licenses, permits, franchises,
approvals,
authorizations, qualifications, concessions
or the like, issued or granted by
any federal, state, local or foreign
Governmental Entity or Regulatory Authority
(as such terms are hereinafter defined),
including, without limitation, SEC and
NASD licenses and registrations, or by any
nongovernmental entity to any Person
or which in any way relate to the business,
operations, activities, properties
and assets of such Person.
1.5
"Audit" shall mean such term as defined in the Letter of
Intent.
1.6
"Average Closing Date Price" means the arithmetic average closing
sale
price per share of NIM Shares for each of
the ten (10) consecutive trading days
ending with the trading day which occurs
immediately prior to the Closing Date.
1.7
"Benefit Plans" has the meaning given such term in Section 4.22
of
this Agreement.
1.8
"Broker" has the meaning given such term in Section 4.28 of
this
Agreement.
1.9
"Broker Fee" has the meaning given such term in Section 4.28 of
this
Agreement.
1.10
"Business Day" means a day other than a Saturday, Sunday or a day
on
which banking institutions in the State of
New York are authorized or obligated
by law or executive order to close.
1.11
"Business" means the business, activities and operations of the
Company, as presently conducted.
1.12
"Closing" has the meaning given such term in Section 3.1 of
this
Agreement.
1.13
"Closing Date" has the meaning given such term in Section 3.1 of
this
Agreement.
1.14
"Code" means the Internal Revenue Code of 1986, as amended.
1.15
"Company" has the meaning given such term in the first paragraph
of
this Agreement.
1.16
"Contract" has the meaning given such term in Section 4.17(a) of
this
Agreement.
1.17
"Control Agreement" has the meaning given such term in Section 2.5
of
this Agreement.
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1.18
"Disclosure Statement" shall mean the Disclosure Statement
delivered
by the Shareholders to the Purchaser
contemporaneously with this Agreement.
1.19
"Environment" means all air, surface water, groundwater or
land,
including, without limitation, land surface
or subsurface, including, without
limitation, all fish, wildlife, biota and
all other natural resources.
1.20
"Environmental Law" means any and all current federal, state,
local,
provincial and foreign, civil and criminal
laws, statutes, ordinances, orders,
codes, rules, regulations, Environmental
Permits, policies, guidance documents,
judgments, decrees, injunctions, or
agreements with any Governmental Entity or
Regulatory Authority, relating to the
protection of health and the Environment,
worker health and safety, and/or governing
the handling, use, generation,
treatment, storage, transportation,
disposal, manufacture, distribution,
formulation, packaging, labeling, or
Release of Hazardous Substance, including,
but not limited to: the Clean Air Act, 42
U.S.C. ss.7401 et seq.; the
Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42
U.S.C. ss.9601 et seq.; the Federal Water
Pollution Control Act, 33 U.S.C.
ss.1251 et seq.; the Hazardous Material
Transportation Act, 49 U.S.C. ss.1801 et
seq.; the Federal Insecticide Fungicide and
Rodenticide Act, 7 U.S.C. ss.136 et
seq.; the Resource Conservation and
Recovery Act of 1976 ("RCRA"), 42 U.S.C.
ss.6901 et seq.; the Toxic Substances
Control Act, 15 U.S.C. ss.2601 et seq.;
the Occupational Safety and Health Act of
1970, 29 U.S.C. ss.651 et seq.; the
Oil Pollution Act of 1990, 33 U.S.C.
ss.2701 et seq.; and the state analogies
thereto; and any common law doctrine,
including, but not limited to, negligence,
nuisance, trespass, personal injury, or
property damage related to or arising
out of the presence, Release, or exposure
to a Hazardous Substance.
1.21
"Environmental Permit" means any federal, state, local,
provincial,
or foreign permits, licenses, consents or
Authorizations required by any
Governmental Entity or Regulatory Authority
under or in connection with any
Environmental Law and includes any and all
orders, consent orders or binding
agreements issued or entered into by a
Governmental Entity or Regulatory
Authority under any applicable
Environmental Law.
1.22
"ERISA" means the Employee Retirement Income Security Act of 1974,
as
amended and the regulations thereunder.
1.23
"Financial Statements" has the meaning given such term in Section
4.8
of this Agreement.
1.24
"Fixed Assets" has the meaning given such term in Section 4.14(a)
of
this Agreement.
1.25
"GAAP" means generally accepted accounting principles in effect
in
the United States of America at the time of
any determination, and which are
applied on a consistent basis. All
accounting terms used in this Agreement which
are not expressly defined in this Agreement
shall have the meanings given to
those terms by GAAP, unless the context of
this Agreement otherwise requires.
1.26
"Governmental Entity or Regulatory Authority" means any court,
tribunal, arbitrator, executive or
regulatory authority, tax authority, agency,
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commission, official or other
instrumentality of the United States of America,
any foreign country or any domestic or
foreign state, county, city, municipality
or other political subdivision.
1.27
"Hazardous Substance" means petroleum, petroleum hydrocarbons
or
petroleum products, petroleum by-products,
radioactive materials, asbestos or
asbestos-containing materials, gasoline,
diesel fuel, pesticides, radon, urea
formaldehyde, lead or lead-containing
materials, polychlorinated biphenyls, and
any other chemicals, materials, substances
or wastes, in any amount or
concentration, which are now or hereafter
become defined or regulated as
"hazardous substances", "hazardous
materials", "hazardous wastes", "extremely
hazardous wastes", "restricted hazardous
wastes", "toxic substances", "toxic
pollutants", "pollutants", "regulated
substances", "solid wastes" or
"contaminants" or words of similar import
under any Environmental Law.
1.28
"Income Tax" means any federal, state, local or foreign Tax (as
such
term is hereinafter defined) that is (a)
based upon, measured by or calculated
with respect to income, profits, capital
stock, net worth or receipts, in each
case whether gross, net or adjusted
(including, without limitation, capital
gains Taxes and minimum Taxes), or (b)
based upon, measured by or calculated
with respect to multiple bases (including,
without limitation, corporate
franchise Taxes) if one or more of the
bases on which such Tax may be based,
measured or calculated with respect to, is
described in clause (a), in each case
together with any interest, penalties or
additions to any Tax in respect of any
of the foregoing, whether disputed or not,
and any obligation to indemnify,
assume or succeed to the liability of any
other Person in respect of the
foregoing (including, without limitation,
as a transferee pursuant to Section
6901 of the Code or otherwise) as a result
of Treasury Regulation ss.1.1502-6 or
any similar provision of applicable law, or
as a result of a tax sharing or
similar agreement, arrangement or
understanding.
1.29
"Indemnification Acknowledgment" has the meaning given such term
in
Section 10.4(a)(ii) of this Agreement.
1.30
"Indemnitee" has the meaning given such term in Section 10.4(a)
of
this Agreement.
1.31
"Indemnitor" has the meaning given such term in Section 10.4(a)
of
this Agreement.
1.32
"Insurance Policies" has the meaning given such term in Section
4.23
of this Agreement.
1.33
"Intellectual Property Rights" means the United States of America
and
foreign patents, copyrights, trademarks,
trade names, service marks, brand
names, business and product names, uniform
resource locators ("URLs") or
internet domain names, internet websites
and the electronic files, content and
layout related thereto, email addresses,
listings in telephone books and
directories and internet directories,
browser and search engines, logos,
symbols, trade dress, design or
representation or expressions of any of the
foregoing, all registrations or
applications for registration of any of the
foregoing, and all databases, source codes,
object codes, computer programs and
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computer software in any form or medium
(including, without limitation, the
Systems (as such term is hereinafter
defined)), in each case that are owned by
the Company and/or were, are or may be used
in connection with the Business or
held for use or being developed by the
Company or by others for use in
connection with the Business, and all trade
secrets, industrial or manufacturing
models, processes, designs and
methodologies, research and development,
inventions, know-how, customer lists,
manufacturing, engineering and other
drawings and blueprints, technology,
technical information, engineering data,
design and engineering specifications,
inventions and other proprietary
processes and information of any kind owned
by the Company or the Shareholders
and were, are or may be used in connection
with the Business.
1.34
"Investment" means, with respect to any Person, any direct or
indirect loan or other extension of credit
(including, without limitation, a
guarantee for the benefit of another
Person) or capital contribution to (by
means of any transfer of cash or other
property to any other Person or any
payment for property or services for the
account or use of any others) any other
Person, or any purchase or acquisition by
such Person of any capital stock,
bonds, securities, debentures or other
securities or evidences of indebtedness
issued by, any other Person.
1.35 "Key
Employee" means those employees of the Company whose names and
positions are listed on Schedule 1.3 of the
Disclosure Statement and any person
who may succeed any such employee in that
position.
1.36
"knowledge", "known", "best of knowledge", shall mean those
matters
of which the applicable Person is "aware"
and language of similar import shall
include all matters actually or
constructively known or which should be known by
such Person, and which, in the case of the
Company, shall include the
Shareholders after due diligence and
reasonable investigation.
1.37
"Legal Requirement" of a Person means any statute, rule,
regulation
or other provision of law, or any order,
judgment or other direction of a court,
arbitration panel or other tribunal
resolution or any Governmental Entity or
Regulatory Authority, or any other
requirement, permit, registration, license or
Authorization applicable to such Person, or
to any of its properties, assets or
business.
1.38
"Liens" means any liens, charges, encumbrances, options, rights
of
first refusal, security interests, claims,
mortgages, pledges, charges,
easements, covenants, restrictions,
obligations or any other encumbrances
(including, without limitation, any
conditional sale or other title retention
agreement or any lease in the nature
thereof and any agreement to grant or to
permit or suffer to exist any of the
foregoing) or third party rights or
equitable interests of any nature
whatsoever.
1.39
"Losses" has the meaning given such term in Section 10.2 of
this
Agreement.
1.40
"Material Adverse Effect" shall mean a material adverse effect on
the
assets, properties, operations, prospects
or condition (financial or otherwise)
of the Company
1.41
"NASD" means National Association of Securities Dealers, Inc.
1.42 "Net
Revenues From Existing Securities Business" has the meaning
given such term in Section 2.4 of this
Agreement.
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1.43 "NIM
Shares" means the shares of common stock of the Purchaser,
$0.001 par value per share.
1.44
"Non-Competition Agreement" means the Non-Competition Agreement,
to
be entered into and dated as of the Closing
Date, between the Purchaser and the
Shareholder, in the form attached hereto as
Exhibit "B".
1.45
"Notice of Claim" has the meaning given such term in Section
10.4(a)(i) of this Agreement.
1.46
"Office Lease" means that certain lease, as amended through the
date
hereof, between the Company and 89 Haddon
Avenue Associates, LLC with respect to
the premises located at 89 North
Haddonfield Avenue, Haddonfield, New Jersey.
1.47
"Person" means any natural individual, corporation,
partnership,
joint venture, trust, limited liability
company, association, organization, firm
or other entity.
1.48
"Personal Property Leases" has the meaning given such term in
Section
4.14(b) of this Agreement.
1.49
"Purchase Price" has the meaning given such term in Section 2.3
of
this Agreement.
1.50
"Purchase Price Shares" has the meaning given such term in
Section
2.3 of this Agreement.
1.51
"Purchaser Indemnified Person" has the meaning given such term
in
Section 10.2 of this Agreement.
1.52
"Purchaser" has the meaning given such term in the first paragraph
of
this Agreement.
1.53
"Release" means any spilling, leaking, pumping, pouring,
emitting,
emptying, discharging, injecting, escaping,
leaching, dumping, or disposing of a
Hazardous Substance into the
Environment.
1.54
"Required Consents" has the meaning given to that term in Section
4.6
of this Agreement.
1.55 "SEC"
means the United States Securities and Exchange Commission.
1.56
"Securities Act" means the Securities Act of 1933, as amended.
1.57
"Shareholder" has the meaning given such terms in the first
paragraph
of this Agreement.
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1.58
"Shareholder Employment Agreement" means the Employment Agreement,
to
be entered into and dated as of the Closing
Date, between the Company and the
Shareholder, in the form attached hereto as
Exhibit "A".
1.59
"Shareholder Indemnified Person" has the meaning given such term
in
Section 10.3 of this Agreement.
1.60
"Shareholder Release" means the Release, to be entered into and
dated
as of the Closing Date, from the
Shareholders to the Companies, in the form
attached hereto as Exhibit "C".
1.61 "SHRA
Agreement" has the meaning given such term in Section 3.2 of
this Agreement.
1.62
"Site" means any real property (including, without limitation,
the
Real Property) currently or previously
leased, used or operated by the Company,
any predecessors of the Company or any
entities previously owned by the Company,
including, without limitation, all soil,
subsoil, surface waters and groundwater
thereat.
1.63
"Subsidiary" of a Person means any entity, the securities of which
or
other ownership interests having ordinary
voting power to elect a majority of
the board of directors or other persons
performing similar functions (including,
without limitation, managers) are at the
time directly or indirectly owned by
such Person or such Person otherwise has
the right to vote or to direct the vote
of such securities or other ownership
interests.
1.64
"Systems" means all computer hardware and software, including,
without limitation, application software
data and databases, applications and
all related documentation utilized in the
Business.
1.65 "Tax
Return" means any federal, state, local or foreign return,
declaration, report, claim for refund or
credit, document, or other information
or filing (including any schedule or
exhibit thereto) that is filed or required
to be supplied to any Governmental Entity
or Regulatory Authority in respect of
or relating to any Tax, and any amendment
thereof, whether on a consolidated,
combined, unitary or separate basis.
1.66 "Tax"
or "Taxes" means any and all taxes, charges, fees, levies,
deficiencies or other assessments of any
nature whatsoever, including, without
limitation, any federal, state, local or
foreign income, gross receipts,
license, payroll, employment, excise,
severance, stamp, occupation, premium,
windfall profits, environmental (pursuant
to Section 59A of the Code or
otherwise), custom duties, capital stock,
net worth, franchise, recording,
employee's income withholding, foreign
withholding, social security (or its
equivalent), unemployment, disability, real
property, personal property,
intangible property, sales, use, transfer,
value added, occupancy, registration,
customs, recording, gains, alternative or
add-on minimum, estimated or other
tax, charge, fee, levy, deficiency or other
assessment of whatever kind or
nature, including any interest, penalties
or additions to tax in respect of the
foregoing, whether disputed or not, and any
obligation to indemnify, assume or
succeed to the liability of any other
Person in respect of the foregoing
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(including, without limitation, as a
transferee (pursuant to Section 6901 of the
Code or otherwise), as a result of Treasury
Regulation ss.1.1502-6 or similar
provision of applicable law, or as a result
of a tax sharing or similar
agreement, arrangement or
understanding).
1.67
"Third Party Claim" means a claim or demand made by any Person who
is
not a party to this Agreement against an
Indemnitee.
Article II
EXCHANGE OF SHARES
2.1
Exchange of Shares. Upon the terms and provisions and subject to
the
conditions hereof, and based upon the
representations, warranties, covenants and
agreements of the Shareholders contained in
this Agreement and the exhibits and
schedules attached hereto and thereto, at
the Closing, the Shareholder shall
sell, transfer, assign, convey and deliver
to the Purchaser, and the Purchaser
shall purchase and acquire from the
Shareholder the Shares, free and clear of
all Liens.
2.2
Excluded Assets and Liabilities. The parties acknowledge and
agree
that, at Closing, the cash and Accounts
Receivable of the Company shall be
retained by the Shareholder.
2.3
Purchase Price. In consideration for the sale, transfer,
assignment,
conveyance and delivery to the Purchaser of
the Shares (free and clear of any
and all Liens) being purchased by the
Purchaser hereunder and the
representations and warranties, covenants
and agreements of the Shareholder set
forth herein and upon the terms and subject
to the conditions contained herein,
the Purchaser, in a transaction intended to
constitute a reorganization
contemplated by Section 368(a)(1)(B) of the
Code, shall pay to the Shareholder
in exchange for the Shares (the "Purchase
Price") such number of NIM Shares
equal to (a) $500,000, divided by (b) the
Average Closing Date Price (the
"Purchase Price Shares"). No fractional
shares of NIM Shares shall be issued
pursuant to this Agreement. If the
Shareholder is entitled to receive a
fractional share, the Shareholder shall be
entitled at the Closing Date to
receive from the Purchaser an amount of
cash in lieu of such factional share
based on the Average Closing Price. If
Purchaser affects any stock split, stock
combination, stock dividend or similar
transaction with respect to the NIM
Shares during the ten (10) consecutive
trading days during which the Average
Closing Price is determined, the dollar
amounts in the preceding sentence shall
be appropriately adjusted to reflect such
change.
2.4
Clawback of Purchase Price.
(a) Upon the failure of the Company during the 12-month period
commencing on the date hereof (the "First
Measurement Period") to achieve EBITDA
(as defined below) of $135,000 (the
"Minimum EBITDA"), as determined by the
Company's accountants, a portion of the
Purchase Price equal to the amount by
which the Minimum EBITDA exceeds the EBITDA
of the Company during the First
Measurement Period shall be returned to the
Purchaser within ten (10) Business
Days of the Shareholder's receipt of a
written notice from the Company setting
forth the computation of EBITDA for the
First Measurement Period in reasonable
detail.
(b) Upon the failure of the Company, during the 12-month period
following the First Measurement Period (the
"Second Measurement Period"), to
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achieve the Minimum EBITDA, as determined
by the Company's accountants, a
portion of the Purchase Price equal to the
amount by which the Minimum EBITDA
exceeds the EBITDA of the Company during
the Second Measurement Period shall be
returned to the Purchaser within ten (10)
Business Days of the Shareholder's
receipt of a written notice from the
Company setting forth the computation of
EBITDA for the Second Measurement Period in
reasonable detail.
(c) Notwithstanding the foregoing, (i) if a payment is made by
the
Shareholder due to an EBITDA shortfall for
the First Measurement Period, such
payment shall be refunded at the end of the
Second Measurement Period if, and to
the extent that, the combined EBITDA for
the First Measurement Period and the
Second Measurement Periods equals or
exceeds $270,000, and (ii) there shall be
no refund of the Purchase Price for any
shortfall during the Second Measurement
Period if and to the extent that the
combined EBITDA for the First Measurement
Period and the Second Measurement Period
equals or exceeds $270,000.
For
purposes of this Note, "EBITDA" means pre-tax income, plus
interest
expense, plus depreciation and amortization
expense, as determined by the
Company's certified public accountants,
which determination shall be binding on
the parties.
(d) If Net Revenues From Existing Securities Business for the
First
Measurement Period as determined by the
Company's accountants is less than
$200,000, a portion of the Purchase Price
equal to the amount by which $200,000
exceeds Net Revenues From Existing
Securities Business for the First Measurement
Period shall be returned to the Purchaser
within ten (10) Business Days of the
Shareholder's receipt of a written notice
from the Company setting forth the
computation of Net Revenues From Existing
Securities Business for the First
Measurement Period in reasonable
detail.
(e) If Net Revenues From Existing Securities Business for the
Second
Measurement Period as determined by the
Company's accountants is less than
$200,000, a portion of the Purchase Price
equal to (i) the amount by which
$200,000 exceeds Net Revenues From Existing
Securities Business for the Second
Measurement Period shall be returned to the
Purchaser within ten (10) Business
Days of the Shareholder's receipt of a
written notice from the Company setting
forth the computation of Net Revenues From
Existing Securities Business for the
Second Measurement Period in reasonable
detail.
(f) Notwithstanding the foregoing, (i) if a payment is made by
the
Shareholder due to a Net Revenues From
Existing Securities Business shortfall
for the First Measurement Period, such
payment shall be refunded at the end of
the Second Measurement Period if, and to
the extent that, the combined Net
Revenues From Existing Securities Business
for the First Measurement Period and
the Second Measurement Periods equals or
exceeds $400,000, and (ii) there shall
be no refund of the Purchase Price for any
shortfall during the Second
Measurement Period if and to the extent
that the combined Net Revenues From
Existing Securities Business for the First
Measurement Period and the Second
Measurement Period equals or exceeds
$400,000.
"Net
Revenues From Existing Securities Business" means an amount equal
to
(i) gross commissions, overrides on
securities transactions paid by or through
broker-dealers and any other fees payable
to the Shareholder or the Company from
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Existing Clients (as defined in the
Shareholder Employment Agreement), less (ii)
any commissions and other fees payable to
the broker-dealer(s) or insurance
companies with whom the Shareholder is
affiliated, less (iii) any other costs or
charges imposed by the broker-dealer,
insurance company or any other third
party, as determined by the Company. The
determination of Net Revenues From
Existing Securities Business by the Company
shall be binding on the parties,
absent manifest error.
2.5
Security Interest. To secure the Shareholder's obligations pursuant
to
Section 2.4 and pursuant to Article X
(Indemnification), the Shareholder shall
grant to the Purchaser a first priority
security interest in securities account
number PH33 3070-2411 in the Purchaser's
name held at Janney Montgomery Scott
LLC (the "Control Agreement Collateral"),
pursuant to the terms of the Control
Agreement dated as of the date hereof by,
between and among the Purchaser, the
Shareholder, Janney Montgomery Scott LLC
and Conestoga Capital Advisors in the
form attached hereto as Exhibit "D" (the
"Control Agreement"), which Control
Agreement shall entitle the Purchaser to
liquidate Control Agreement Collateral
upon the Shareholder's payment default
under Section 2.4 or upon the making of
an indemnity claim in accordance with
Article X hereof.
2.6
Piggyback Registration.
(a) If at any time the Purchaser proposes to register any NIM
Shares
under the Securities Act of 1933, as
amended (the "Securities Act"), either for
its own account or for the account of
others, on a registration form that would
also permit the registration of the
Purchase Price Shares (or any NIM Shares
received by the Shareholder arising from a
stock dividend, stock split,
reorganization, reclassification, merger,
exchange or similar occurrence) (other
than a registration covering NIM Shares
issued pursuant to an employee benefit
plan, or a registration on Form S-4 for the
purpose of offering such securities
to another business entity or the
shareholders of such entity in connection with
the acquisition of assets or shares of
capital stock, respectively, of such
entity), the Purchaser shall, each such
time, promptly give the Shareholder
written notice of such proposal. Within 30
days after such written notice is
given, the Shareholder shall give notice to
the Purchaser as to the number of
shares of the Purchase Price Shares, if
any, which the Shareholder requests to
be registered simultaneously with such
registration by the Purchaser. The
Purchaser shall include in such
registration statement the Purchase Price Shares
that the Shareholder requests to be
registered under the Securities Act and
shall take such actions as shall be
necessary to maintain the effectiveness of
such registration for a period of two
hundred seventy (270) days.
(b) Notwithstanding the foregoing, if such registration
statement
was initiated by the Purchaser to effect a
primary public offering of its
securities and, if at any time after giving
written notice of its intention to
so register securities and before the
effectiveness of the registration
statement filed in connection with such
registration, the Purchaser determines
for any reason either not to effect such
registration or to delay such
registration, the Purchaser may, at its
election, by prior written notice to the
Shareholder: (i) in the case of a
determination not to effect registration,
relieve itself of its obligation to
register the Purchase Price Shares in
connection with such registration; or (ii)
in the case of a determination to
delay registration, delay the registration
of the Purchase Price Shares for the
same period as the delay registration of
such other securities. The Shareholder
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may, at any time before the effective date
of the registration statement
relating to such registration, revoke such
request by written notice of such
revocation to the Purchaser, in which case
the Purchaser shall cause the
Purchase Price Shares to be withdrawn from
such registration statement. In
furtherance and not in limitation of the
foregoing, in connection with any
offering involving an underwriting of
shares of the Company's capital stock, the
Company shall not be required to include
any of the Purchase Price Shares in
such underwriting unless the Shareholder
accepts the terms of the underwriting
as agreed upon between the Company and the
underwriters selected by it (or by
other persons entitled to select the
underwriters), and then only in such
quantity as the underwriters determine in
their sole discretion will not
jeopardize the success of the offering by
the Company, provided, however, that
if securities are being offered for the
account of persons or entities as well
as the Company, such reduction shall not
represent a greater fraction of the
number of Purchase Price Shares intended to
be offered by the Shareholder than
the fraction of similar reductions imposed
on such other persons or entities
(other than the Company).
(c) In connection with any registration of Purchase Price
Shares,
the Shareholder and the Company shall enter
into indemnification arrangements
customary for a registration of this
nature.
Article III
CLOSING
3.1 The
Closing. The closing of the purchase and sale of the Shares
hereunder and the other transactions
contemplated hereby (the "Closing") shall
take place at 10:00 a.m. local time on
August __, 2005 or on such other date and
time as may be agreed to in writing by the
Purchaser and the Shareholder (the
"Closing Date"), at the offices of the
Purchaser's counsel, Cohen Tauber
Spievack & Wagner, LLP or such other
location as may be agreed to in writing by
the Purchaser and the Shareholder. All
transactions contemplated hereunder to
occur on the Closing Date shall be deemed
to have occurred simultaneously at
12:01 a.m. (local time) on the Closing
Date.
3.2
Obligations of the Shareholder. At the Closing and subject to
the
terms, provisions and conditions contained
herein, the Shareholder shall and
shall cause the Company to take all actions
and do all things necessary to sell,
transfer, assign, convey and deliver the
Shares to the Purchaser, free and clear
of any and all Liens, and to consummate the
transactions contemplated hereby,
including, without limitation, delivery or
causing to be delivered to the
Purchaser the following:
(a) the Shares, as evidenced by certificate nos. 3 and 4, duly
endorsed in blank or accompanied by stock
powers duly executed in blank and
bearing all necessary stock transfer tax
stamps affixed thereto, sufficient to
transfer the Shares to Purchaser on the
books of the Company;
(b) the Non-Competition Agreement, executed by the Shareholder;
(c) the Shareholder Employment Agreement, executed by the
Shareholder;
(d) the Shareholder Release, executed by the Shareholder;
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<PAGE>
(e) the Control Agreement, executed by the Shareholder; Janney
Montgomery Scott LLC and Conestoga Capital
Advisors;
(f) a certificate dated as of the Closing Date, executed by the
Secretary of the Company, certifying that
attached thereto are true, correct and
complete copies of the Certificate of
Incorporation and By-Laws of the Company;
(g) executed originals of all Required Consents and all consents
and
Authorizations necessary or required to be
obtained in order to consummate the
transactions contemplated hereby;
(h) evidence satisfactory to the Purchaser of the payment by
the
Company of all Taxes due and payable as of
the Closing Date;
(i) all of the Company's books, records and other data and
materials;
(j) evidence of the closing of the transactions contemplated by
the
Stock Purchase Agreement, of even date
herewith, among the Purchaser, Stephen H.
Rosen, Elizabeth Davies, and Stephen H.
Rosen Associates, Inc. (the "SHRA
Agreement");
(k) the opinion of counsel referred to in Section 7.10 hereof;
and
(l) such other certificates, documents, receipts and
instruments
relating to the Company as the Purchaser or
its legal counsel may reasonably
request.
3.3
Obligations of the Purchaser. At the Closing and subject to the
terms,
provisions and conditions contained herein,
the Purchaser shall deliver to the
Shareholders the following:
(a) the NIM Shares representing the Purchase Price;
(b) a certificate dated as of the Closing Date, executed by an
officer of the Purchaser certifying that
attached thereto is a true, correct and
complete copy of the resolutions adopted by
the board of directors of the
Purchaser relating to authorizing the
execution, delivery and performance of
this Agreement and the other Purchaser
Documents and the consummation of the
transactions contemplated hereby and
thereby and the incumbency of the officers
of the Purchaser executing this Agreement
and the other Purchaser Documents; and
(c) the Non-Competition Agreement, executed by the Purchaser;
(d)
the Shareholder Employment Agreement, executed by the Company;
(e) the Control Agreement, executed by the Purchaser; and
(f) evidence of the closing of the transactions contemplated by
the
SHRA Agreement.
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<PAGE>
Article IV
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER
The Shareholder hereby represents and warrants to the Purchaser
as
follows:
4.1
Capitalization; Ownership of Shares; No Liens on Shares. The
authorized capital stock of the Company
consists of 1,000 shares of common
stock, par value $.01 per share, of which
250 shares are issued and outstanding,
all of which are held beneficially and of
record by the Shareholder, free and
clear of all Liens. All such issued and
outstanding Shares are duly authorized,
validly issued, fully paid and
nonassessable. None of the Shares were issued or
will be transferred under this Agreement in
violation of any preemptive or
preferential rights of any Person. There
are no options, warrants, calls,
subscriptions, conversions or other similar
rights, agreements or commitments to
acquire from either Company or the
Shareholders any shares of capital stock or
any other securities convertible into,
exchangeable for or evidencing the right
to subscribe for any shares of capital
stock of either Company; none of the
Shares are subject to any restrictions on
transfer thereof; and the Shareholder
has the full power and authority to convey,
and will convey to Purchaser at
Closing, good and marketable title to the
Shares, free and clear of all Liens.
4.2
Organization; Good Standing. The Company is a corporation duly
organized, validly existing and in good
standing under the laws of the State of
New Jersey, and has the power and authority
to own and lease its assets and
properties and to conduct the Business as
it is now being conducted. The Company
is duly qualified or licensed to do
business and is in good standing as a
foreign corporation under the laws of those
jurisdictions listed on Schedule 4.2
of the Disclosure Statement, constituting
each jurisdiction in which the conduct
of the Business or the ownership or leasing
of its assets and properties
requires such qualification. Attached to
Schedule 4.2 of the Disclosure
Statement are true, correct and complete
copies of the Certificate of
Incorporation, as amended, certified by the
Secretary of State of the State of
New Jersey, and the By-Laws of the
Company.
4.3
Authority; Enforceability. The Shareholder and the Company have
the
requisite legal capacity to execute,
deliver and perform, as applicable, this
Agreement, the Shareholder Release, the
Shareholder Employment Agreement and the
Non-Competition Agreement to which such
Person is, or will be, a party. This
Agreement has been duly executed and
delivered by the Shareholder and the
Company and this Agreement constitutes the
legal, valid and binding obligations
of the Shareholder and the Company,
enforceable against the Shareholder and the
Company in accordance with its terms.
4.4 No
Conflict.
(a) Except as set forth on Schedule 4.4(a) of the Disclosure
Statement, the execution, delivery and
performance of this Agreement by the
Company and the Shareholder and the
consummation of the transactions
contemplated hereby do not and will not (i)
violate or conflict with any
provision of the Certificate of
Incorporation of the Company and the By-Laws of
the Company; (ii) violate, conflict with,
result in a breach of or constitute
(with or without notice or lapse of time or
both) a default under, give rise to
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<PAGE>
a right of termination, amendment or
cancellation of, accelerate the performance
required by, or result in any payment
under, any Contract, instrument or other
writing of any nature whatsoever to or by
which the Company or the Shareholder
is a party or is bound, or to which the
Business is subject; (iii) violate,
conflict with or result in a breach of any
Legal Requirement; or (iv) result in
the creation of any Lien on any of the
Company's assets.
(b) The execution, delivery and performance by the Shareholder
of
this Agreement, the Shareholder Release,
the Shareholder Employment Agreement
and the Non-Competition Agreement, and the
consummation of the transactions
contemplated hereby and thereby, and the
execution, delivery and performance by
the Company of this Agreement and the
consummation of the transactions
contemplated hereby, do not and will not
(i) violate, conflict with, result in a
breach of or constitute (with or without
notice or lapse of time or both) a
default under, give rise to a right of
termination, amendment or cancellation
of, accelerate the performance required by,
or result in any payment under, any
Contract, instrument or other writing of
any nature whatsoever to or by which
the Shareholder or the Company is a party
or bound, or by which any of the
Company's assets or the Business is
subject; (ii) violate, conflict with or
result in a breach of any Legal Requirement
applicable to the Shareholder or the
Company; or (iii) result in the creation of
any Lien on any of the Company's
assets.
4.5
Litigation; Compliance with Law.
(a) Schedule 4.5(a) of the Disclosure Statement contains a
true,
complete and correct list of all actions,
suits, proceedings (including, without
limitation, all arbitrations and
alternative dispute resolution proceedings), or
governmental investigations pending or, to
the best knowledge of the
Shareholder, threatened against the Company
or any of its properties or assets
or any of the Company's officers, directors
or employees or the Shareholder
which in any way arises out of or relates
to the Business or any of the
Company's assets, in each case, at any time
during the last three (3) years.
Except as set forth in Schedule 4.5(a) of
the Disclosure Statement, there is no
claim, action, suit, proceeding (including,
without limitation, all arbitrations
and alternative dispute resolution
proceedings) or governmental investigation
before any court, arbitrator or
Governmental Entity or Regulatory Authority
pending or, to the best knowledge of the
Shareholders, threatened against the
Company or the Shareholder or which relates
to or arises out of the Business or
any Legal Requirement relating to the
Business, the Company's relationships with
any of its customers or the transactions
contemplated by this Agreement, nor
does the Company or the Shareholder have
any knowledge of any reasonably likely
basis or set of circumstances for any such
action, suit, proceeding, claim or
investigation: (i) the result of which
could materially and adversely affect the
Business, the Company's relationships with
any of its customers or the
transactions contemplated hereby; (ii)
questions the validity of this Agreement;
(iii) could impair the ability of the
Shareholder to consummate the transactions
contemplated hereby; (iv) could materially
adversely affect and impact the
Purchaser's rights to, or enjoyment of, the
Company's assets and the Business
following the Closing; or (v) seeks to
delay, prohibit, or restrict in any
manner any action contemplated hereby.
(b) Except as set forth on Schedule 4.5(b) of the Disclosure
Statement, none of the Company's assets or
the Company or any of the Company's
officers, directors or employees or the
Shareholder, in each case with respect
to the Business or the Company's assets, is
subject or a party to, or bound by
or otherwise affected by, any judgment,
order, decree, restraint or other
14
<PAGE>
directive of or stipulation with any court
or other Governmental or Regulatory
Authority or tribunal, or in violation of
any other Legal Requirement, and the
Shareholder has no knowledge of any
reasonable basis for a claim that such a
violation exists. The Shareholder is not
aware of any proposed Legal Requirement
that might affect any of the operations or
prospects of the Business or any of
the Company's assets.
(c) The Shareholder has furnished, or have caused the Company
to
furnish, to the Purchaser true, correct and
complete copies of (i) all pleadings
in, and material correspondence with
respect to, the actions, suits,
proceedings, claims or governmental
investigations set forth on Schedule 4.5(a)
of the Disclosure Statement, (ii) responses
to accountant audit inquiry letters
from attorneys with respect to the Company
since 2002; and (iii) insurance
company loss run reports indicating the
claim experience of the Company in
respect of personal injury, worker's
compensation, general liability, errors and
omissions and automobile liability claims
for the period during the three (3)
years preceding the Closing Date.
(d) Neither the Company nor the Shareholder are in violation of
any
federal, state or local statute, law,
regulation, ordinance or administrative
order affecting the operation of the
Business. No complaints have been filed
with any Governmental Agency or Regulatory
Authority, or threatened in writing,
against the Company or its Affiliates of
the Shareholder within the past
thirty-six (36) months. Neither the Company
nor the Shareholder have received
any written or oral notice or demand
relating to a violation or claimed
violation under any applicable federal,
state or local laws, rules, ordinances,
policies or regulations.
4.6
Consents; Third Party Options.
(a) Except as set forth in Schedule 4.6 of the Disclosure
Statement
(the "Required Consents"), no filing or
registration with, notice to or
authorization, consent or approval or other
action (including, without
limitation, the grant of any waiver) of any
Governmental Entity or Regulatory
Authority or any other Person is required
to be obtained by the Company or the
Shareholder in connection with (i) the sale
to the Purchaser of the Shares; (ii)
the execution, delivery and performance of
this Agreement and the consummation
of the transactions contemplated hereby and
thereby; and (iii) following the
Closing, the enjoyment and possession by
the Purchaser of all of the rights and
privileges with respect to the Company's
assets and the Business which the
Company has enjoyed or possessed prior to
the Closing, including, without
limitation, all rights and privileges under
existing Contracts with clients and
customers.
(b) There are no existing Contracts, options, commitments with
or
rights granted to any Person to acquire
(whether directly by merger, or
otherwise) the Business or any of the
Company's assets or any interest therein.
4.7 No
Subsidiaries. The Company does not own, directly or indirectly,
any
shares of capital stock of any corporation
or any equity investment in any
Person, limited liability company,
partnership, association or other business
organization. The Company has no
Subsidiaries.
15
<PAGE>
4.8
Financial Statements. Attached as Schedule 4.8 to the
Disclosure
Statement are true and complete copies of
(i) the audited balance sheets of the
Company as of December 31, 2003 and 2004,
and the related combined statements of
operations, stockholders' equity and cash
flows (together with the related
notes) for the years ended December 31,
2003 and 2004, as audited by Rothstein
Kass & & Company, P.C., and (ii)
the unaudited balance sheet and the related
statement of income (together with the
related notes) as of and for the six (6)
month period ended June 30, 2005 (all of
the foregoing, collectively, the
"Financial Statements"). The Financial
Statements (x) fairly present the
financial position of the Company as of the
dates thereof and the results of its
operations, cash flows and stockholders'
equity for each of the periods then
ended; (y) have been prepared in accordance
with GAAP; and (z) have been
prepared from and are in agreement with the
books and records of such Company
and include all adjustments, consisting
only of normal recurring accruals which
the Company believes are necessary for a
fair presentation of financial position
of the Company. Since December 31, 2004
there has been no change in any
accounting (including Tax accounting)
policies, practices or procedures of the
Company. Except as set forth on Schedule
4.8 of the Disclosure Statement, no
uncollectible accounts receivable are
reflected on any of said balance sheets in
excess of the reserves set forth thereon
for uncollectible items.
4.9
Absence of Undisclosed Liabilities.
(a) Except as set forth on Schedule 4.9(a) of the Disclosure
Statement, the Company has no liabilities
or obligations, except those set forth
or adequately reserved against on the
balance sheets contained in the Financial
Statements (or disclosed in the notes
thereto), other than those incurred in the
ordinary course of business and in a manner
consistent with past practices.
(b) All capital expenditures of the Company from and after
January
1, 2005 are set forth on Schedule 4.9(b) of
the Disclosure Statement. All
liabilities and obligations of the Company
incurred since January 1, 2005 have
been incurred in the ordinary course of
business, in a manner consistent with
past practice and are not materially
adverse to the assets, operations or
prospects of the Company. The Shareholder
has no knowledge of any basis for the
assertion against the Company of any other
liability or loss contingency. For
purposes of this Section 4.9(b), all
references to the Company's liabilities
shall include, without limitation, all
liabilities, whether direct or indirect,
absolute, contingent or matured, known or
unknown, asserted or unasserted, and
liquidated or unliquidated.
4.10 No
Material Adverse Change. Since January 1, 2005, the Company has
operated its business diligently and only
in the ordinary course of business,
and there has been no material adverse
change in the business, operations,
properties, assets, liabilities,
commitments, earnings, financial condition or
prospects of the Company, except as
specifically disclosed in the footnotes, if
any, to the Financial Statements. Without
limiting the foregoing, except as set
forth on Schedule 4.10 of the Disclosure
Statement, since January 1, 2005, the
Company has not:
(i) suffered any damage, destruction or loss of physical
property (whether or not covered by
insurance) in excess of $25,000;
16
<PAGE>
(ii) incurred or agreed to incur any indebtedness for borrowed
money;
(iii) suffered any substantial loss or waived any substantial
right;
(iv) sold, transferred or otherwise disposed of, or agreed to
sell, transfer or otherwise dispose of, any
assets other than in the ordinary
course of business;
(v) mortgaged, pledged or subjected to any charge, lien, claim
or encumbrance, any of its properties or
assets;
(vi) increased, or agreed to increase, the compensation or
bonuses or special compensation of any kind
of any of its officers, employees or
agents, other than normal merit and/or
cost-of-living increases pursuant to
customary arrangements consistently
followed, or adopted or increased any
benefit under any insurance, pension or
other employee benefit plan, payment or
arrangement made to, for or with any such
officer, employee or agent;
(vii) lost any material customer or client or knows of any
threatened cancellation of a customer or
client relationship; or
(viii) entered into any transaction not in the ordinary course
of its business.
4.11
Taxes.
(a)
(i) The
Company has duly and timely (A) filed with the
appropriate Governmental Entity and
Regulatory Authority all Tax Returns
required to be filed by, including or
relating to the Company, its income,
operations, payroll and business, with
respect to all periods ending on or prior
to the date hereof, which Tax Returns are
true, correct and complete; and (B)
paid the amount of Tax showing as payable
on such Tax Returns for all periods
ending on or prior to the Closing Date.
(ii) The Company has duly and timely paid all Taxes due and
payable on or before the date hereof and
properly accrued on the Financial
Statements and books and records in
accordance with GAAP all Taxes in respect of
all periods up to and including the date
hereof that are not yet payable and has
not incurred any liability for Taxes that
was not fully reflected or properly
accounted for on the Financial
Statements.
(iii) The Shareholder has duly and timely (A) filed with the
appropriate Governmental Entity and
Regulatory Authority all Tax Returns
required to be filed by the Shareholder
with respect to all periods ending on or
prior to the date hereof, which Tax Returns
are true, correct and complete; and
(B) paid the amount of Tax showing as
payable on such Tax Returns for all
periods ending on or prior to the Closing
Date.
(iv) The Company has complied in all material respects with
all applicable Legal Requirements, rules,
and regulations relating to the
collection, withholding and payment of
Taxes. No Governmental Entity or
17
<PAGE>
Regulatory Authority has proposed, asserted
or assessed (tentatively or
otherwise) any adjustment that could result
in an additional Tax for which the
Company is or may be liable or which could
result in a Lien on any of the
Company's assets that has not been finally
settled and fully paid. There is no
pending, proposed or, to the knowledge of
the Company and the Shareholders,
threatened audit, examination,
investigation, dispute, deficiency assessment,
refund litigation, claim, or other
administrative or judicial proceeding
relating to any Tax for which the Company
is or may be liable and which could
result in a Lien on any of the Company's
assets.
(v) None of the Company's assets is "tax-exempt use property"
or "tax-exempt bond-financed property"
within the meaning of Section 168(g) and
(h), respectively, of the Code.
(vi) There are no closing agreements within the meaning of
Section 7121 of the Code or any similar
provision of applicable law, ruling
requests, requests to consent to change a
method of accounting, Code Section 481
adjustments, subpoenas or requests for
information with or by any Governmental
Entity or Regulatory Authority that could
reasonably be expected to affect any
Tax for which the Company or the
Shareholder is or may be liable and which could
result in a Lien on any of the Company's
assets.
(vii) Schedule 4.11(vii) of the Disclosure Statement sets
forth a list of each jurisdiction in which
the Company files or is presently
required to file a Tax Return and the type
of Tax Return filed, and except as
set forth thereon, no Governmental Entity
or Regulatory Authority where such
entity does not file a Tax Return with
respect to a particular Tax has made a
claim or assertion that such entity is
subject to such Tax in such jurisdiction
or is required to file a Tax Return with
respect to such Tax in such
jurisdiction. Federal Income Tax Returns of
the Company have been audited and
the audits thereof completed or the statute
of limitations has run for all
fiscal years ending on or prior to December
31, 2001.
(viii) All applicable sales taxes and use taxes due in
connection with the Company's assets and
leased properties (including those set
forth on the balance sheets contained in
the Financial Statements and those
fixed assets or leases acquired from that
date through the Closing Date) have
been paid in full.
(b) The Company is an (i) "S corporation" as defined in Section
1361
of the Code for federal income Tax purposes
from inception to the date hereof,
and (ii) an "S corporation" (or its
equivalent) for state and local income and
franchise tax purposes from inception to
the date hereof in each jurisdiction in
which it is or was required to or has filed
an income or franchise Tax Return.
Schedule 4.11(b) of the Disclosure
Statement sets forth a list of each state in
which the Company conducts business or
operations or has employees or assets.
The "S" corporation election was valid for
all periods in effect.
(c) The Company has not engaged in any transaction that is a
"tax
shelter" as defined in Section 6111 of the
Code.
4.12
Personal Property. Except as set forth on Schedule 4.12 of the
Disclosure Statement the Company has good,
valid and marketable title to or, in
the case of leases and licenses, valid and
subsisting leasehold interests or
18
<PAGE>
licenses in, all of its properties and
assets of whatever kind (whether real,
personal, mixed, tangible or intangible),
in each case free and clear of any and
all Liens. All assets, properties and
rights relating to the Business of the
Company are owned by the Company, and
neither the Shareholder nor any of the
Shareholder's Affiliates or family members
has any ownership interest therein.
The Company's assets (including, without
limitation, the facilities, furniture
and office equipment of the Company) that
are owned, together with those used or
occupied under lease or used under license,
are free from material defects, are
in good operating condition and a good
state of maintenance and repair, subject
only to normal wear and tear in the
ordinary course of business, and are
suitable for the continued conduct of the
Business in a manner consistent with
past practices. The Company's assets
include all rights and property necessary
for the conduct of the Business by the
Purchaser in the manner it is presently
conducted by the Company.
4.13 Real
Property.
(a) The Company does not own any real property.
(b) The Company has a valid leasehold interest in the real
property
described in the Office Lease, free and
clear of all Liens, and the Office Lease
is in full force and effect and enforceable
in accordance its terms. The rent
and other charges payable under the Office
Lease are consistent with current
market rates. A true, correct and complete
copy of the Office Lease (including,
without limitation, all amendments and
subleases, if applicable) is attached to
the Disclosure Statement as Schedule 4.13.
The Company has not assigned, pledged
or otherwise transferred, and has not
sublet the premises demised by such Office
Lease or granted to any Person the right to
possession, use or occupancy of the
premises leased thereunder. No event has
occurred or failed to occur which (with
the giving of notice or the passage of
time, or both) would constitute a default
under the Office Lease. All brokerage
commissions payable by the Company and/or
the Shareholder with respect to the Office
Lease have been fully paid.
4.14 Fixed
Assets; Personal Property Leases.
(a) Schedule 4.14(a) of the Disclosure Statement contains a
true,
complete and correct list and brief
description of the fixed assets of the
Company including equipment, computers,
furniture, leasehold improvements,
vehicles and other ite
