Exhibit 2.1
____________________________
STOCK PURCHASE
AGREEMENT
____________________________
Among
EMPIRE FINANCIAL HOLDING
COMPANY,
JESUP & LAMONT HOLDING
CORPORATION,
and
JESUP & LAMONT SECURITIES
CORPORATION
September 14, 2006
LIST OF
SCHEDULES
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Schedule
3.01
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Corporate Existence
and Qualification
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|
Schedule
3.03(a)
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Capital Stock of
the Company
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|
Schedule
3.04
|
No Seller Defaults
or Consents
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|
Schedule
3.05
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No Company Defaults
or Consents
|
|
Schedule
3.07(a)
|
Employee
Arrangements
|
|
Schedule
3.07(b)
|
Benefit
Programs
|
|
Schedule
3.07(c)
|
Benefit Plan
Liabilities
|
|
Schedule
3.07(e)
|
Current
Employees
|
|
Schedule
3.08(a)
|
Financial
Statements
|
|
Schedule
3.08(b)
|
Scheduled
Liabilities
|
|
Schedule
3.08(c)
|
Accounts
Receivable
|
|
Schedule
3.09(a)
|
Certain
Changes
|
|
Schedule
3.09(b)
|
Certain
Actions
|
|
Schedule
3.10(1)
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Compliance with
Law
|
|
Schedule
3.10(2)
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Citations
|
|
Schedule
3.12(a)
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Encumbrances
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|
Schedule
3.12(b)
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Leased Premises
Matters
|
|
Schedule
3.12(c)
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Intangible
Rights
|
|
Schedule
3.12(d)
|
Other Person
Authorizations
|
|
Schedule
3.13
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Commitments
|
|
Schedule
3.17
|
Consents and
Approvals
|
|
Schedule
3.19
|
Banks, Accounts and
Authorized Signatories
|
|
Schedule
3.20
|
Suppliers and
Customers
|
|
Schedule
3.23(d)
|
Compensation of
Directors and Officers
|
|
Schedule
3.23(f)
|
Employment
Arrangements Not Terminable at Will
|
|
Schedule
3.24
|
Affiliate
Transactions
|
|
Schedule
5.02
|
Certain Permittable
Transactions
|
|
Schedule
8.01(a)
|
Tax
Returns
|
|
Schedule
8.01(b)
|
Tax
Claims
|
|
Schedule
8.01(c)
|
Tax
Extensions
|
1
LIST OF EXHIBITS
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Exhibit
A
|
-
|
Form of Promissory
Note
|
A-1
|
|
Exhibit
B
|
-
|
Employment
Agreement - Stephen J. DeGroat
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B-1
|
|
Exhibit
C
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-
|
Employment
Agreement - William F. Moreno
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C-1
|
|
Exhibit
D
|
-
|
Registration Rights
Agreement
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D-1
|
|
Exhibit
E
|
-
|
Investment
Representation Letter
|
E-1
|
|
Exhibit
F
|
-
|
Opinion of
Buyer’s Counsel
|
F-1
|
|
Exhibit
G
|
-
|
Opinion of
Seller’s Counsel
|
G-1
|
2
STOCK PURCHASE
AGREEMENT
This STOCK PURCHASE AGREEMENT (this
“Agreement”) is made and entered into as of the 14th
day of September, 2006, by and among Empire Financial Holding
Company, a Florida corporation (the “Buyer”), Jesup
& Lamont Holding Corporation, a Delaware corporation (the
“Seller”), and Jesup & Lamont Securities
Corporation, a Washington corporation (the
“Company”).
Recitals
A. The
Seller owns of record and beneficially 12,204 shares of common
stock, without par value (the “Shares”), of the
outstanding capital stock of the Company.
B. Buyer
desires to purchase the Shares, and Seller desires to sell such
Shares, upon the terms and subject to the conditions set forth
herein.
Agreement
NOW, THEREFORE, in consideration of
the premises and of the mutual covenants contained herein, the
parties agree as follows:
ARTICLE I. - SALE AND PURCHASE OF
SHARES
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1.01
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Sale and Purchase of
Shares .
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(a) On
the terms and subject to the conditions of this Agreement, at the
Closing referred to in Section 2.01, Seller shall sell, convey,
assign, transfer and deliver to Buyer, and Buyer shall purchase,
acquire and accept delivery of, the Shares, free and clear of any
and all liens, mortgages, adverse claims, charges, security
interests, encumbrances or other restrictions or limitations
whatsoever (“Liens”).
(b) To
effect the transfers contemplated by Section 1.01(a), at the
Closing, the Seller shall deliver or cause to be delivered to
Buyer, against payment therefor in accordance with Section 1.02,
stock certificates representing the Shares, accompanied by stock
powers duly executed in blank and otherwise in form acceptable to
Buyer for transfer on the books of the Company.
1.02
Payment for Shares . As payment for the
Shares being acquired by the Buyer hereunder, Buyer shall deliver
to Seller at the Closing (i) by official bank check or wire
transfer in immediately available funds, an amount equal to
$1,000,000 (the “Cash Consideration”), (ii) a stock
certificate representing 1,750,000 shares of common stock, $.01 par
value, of the Buyer (the “Buyer Stock”) and (iii) an
unsecured, non-negotiable promissory note, payable to Seller, in
the principal amount of $2,500,000, substantially in the form of
Exhibit A attached hereto (the “Note”). The Cash
Consideration, the Buyer Stock and the Note are collectively as the
“Purchase Price.”
1.03
Purchase Price Adjustment . The Purchase Price shall be
reduced (the “Purchase Price Adjustment”) by
subtracting $2,000,000 from the Company’s Net Worth
(hereinafter
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defined) as of the Closing Date
(hereinafter defined). In the event that the Company’s Net
Worth is greater than $2,000,000, no adjustment will be made to the
Purchase Price. The Purchase Price Adjustment, if any, will be paid
by the Seller to the Buyer within 15 days of the final
determination of the Purchase Price Adjustment by the Seller
delivering the original Note to the Buyer and the Buyer issuing a
replacement Note to the Seller with a principal amount equal to the
original principal amount, less the amount of the Purchase Price
Adjustment. The Note shall bear interest from and after the
original date of the Note on the adjusted principal amount and not
on the original principal amount. Any disputes with respect to the
calculation of the Purchase Price Adjustment shall be resolved in
accordance with the procedures contemplated by Section
1.05.
1.04
Closing Date Balance Sheet . As soon as practical (and in no
event later than 30 days after the Closing Date), Seller shall
cause to be prepared and delivered to the Buyer (i) a balance
sheet of the Company dated as of the Closing Date (the
“Closing Date Balance Sheet”) setting forth, among
other matters, the Company’s Net Worth, and (ii) and a
calculation of the Purchase Price Adjustment, including such
schedules and data as may be appropriate to support such
calculation. The Closing Date Balance Sheet shall be prepared in
accordance with GAAP applied on a consistent basis with the
Financial Statements, except that the Closing Date Balance Sheet
shall include any amounts then owed to the Company by the Seller or
any of the Seller’s affiliates or then owed to the Company by
any officers, directors or employees of the Company or the Seller
and shall not include the liabilities described on Schedule
3.08(b). The Buyer and its accountants shall be entitled to review
the Closing Date Balance Sheet and Seller’s calculations of
the Purchase Price Adjustment, and any working papers, trial
balances and similar materials relating to the Closing Date Balance
Sheet prepared by Seller or its accountants. The Seller shall also
provide the Buyer and its accountants with timely access, during
normal business hours, to the Seller’s personnel, properties,
books and records to the extent related to the determination of the
Purchase Price Adjustment.
1.05
Disputes . The following provisions sets forth the
procedures for resolving disputes between the parties with respect
to the determination of the Purchase Price Adjustment:
(a) Within
30 days after delivery to Buyer of Seller’s calculation of
the Purchase Price Adjustment, including without limitation, the
calculation of the Company’s Net Worth, Buyer may deliver to
Seller a written report (the “Buyer’s Report”)
advising Seller that Buyer either (A) agrees with Seller’s
calculations of the Purchase Price Adjustment, or (B) deems that
one or more adjustments are required as described in reasonable
detail in the Buyer’s Report. The costs and expenses for the
preparation of the Buyer’s Report shall be borne by the
Buyer. The Seller and its accountants shall be entitled to review
the Buyer’s Report and Buyer’s calculations of its
Proposed Purchase Price Adjustment and any working papers, trial
balances and similar materials related to the Buyer’s Report
prepared by Buyer and its accountants. If Buyer agrees with
Seller’s calculation or if Seller shall concur with the
adjustments proposed by Buyer, or if Seller shall not object
thereto in a writing delivered to Buyer within 30 days after
Seller’s receipt of the Buyer’s Report, the calculation
of the Purchase Price Adjustment as set forth in the Buyer’s
Report shall become final and shall not be subject to further
review, challenge or adjustment (absent fraud). If Buyer does not
submit the Buyer’s Report within the 30-day period provided
herein, then the Purchase Price Adjustment as calculated by Seller
shall become final and shall not be subject to further review,
challenge or adjustment (absent fraud).
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(b) In
the event that Buyer submits the Buyer’s Report and Seller
has delivered a written objection to the Buyer’s Report
within 30 days after Seller’s receipt of the Buyer’s
Report (the “Seller’s Objections”) and,
thereafter Seller and Buyer are unable to resolve the disagreements
in the Seller’s Objections within 20 days after the date that
the Seller’s Objections are received by Buyer, then such
disagreements shall be referred to a recognized firm of independent
certified public accountants selected by mutual agreement of the
Seller and the Buyer (the “Settlement Accountants”),
and the determination of the Settlement Accountants shall be final
and shall not be subject to further review, challenge or adjustment
absent fraud. The Settlement Accountants shall use their best
efforts to reach a determination not more than 45 days after such
referral. The costs and expenses of the services of the Settlement
Accountants shall be paid by Buyer if (A) the difference between
(i) the Purchase Price Adjustment resulting from the determination
of the Settlement Accountants, and (ii) the Purchase Price
Adjustment resulting from the determination set forth in the
Buyer’s Report, is greater than (B) the difference between
(i) the Purchase Price Adjustment resulting from the determination
of the Settlement Accountants, and (ii) the Purchase Price
Adjustment resulting from Seller’s calculation of the
Purchase Price Adjustment; otherwise, such costs and expenses of
the Settlement Accountants shall be paid by Seller.
ARTICLE II. -
CLOSING
2.01
Closing . The closing of the transactions contemplated
herein (the “Closing”) shall be held at 11:00 a.m.
local time on October 20, 2006 at the offices of Greenberg Traurig,
LLP., 2200 Ross Avenue, Suite 5200, Dallas, Texas 75201 unless the
parties agree in writing to another time, date or place.
Notwithstanding the foregoing, unless this Agreement has been
previously terminated pursuant to the provisions of Section 9.01,
the Closing shall be delayed until five Business Days after all of
the conditions set forth in Article VI have been satisfied. The
term “Closing Date” shall mean the date on which the
Closing occurs.
2.02
Deliveries by Seller . At or prior to the Closing, the
Seller shall deliver (or cause to be delivered) to
Buyer:
(i) certificates
representing all of the Shares, duly endorsed in blank for
transfer, or with appropriate stock powers in blank
attached;
(ii) the
resignations of all the officers and directors of the Company,
except for Stephen J. DeGroat and William F. Moreno;
(iii) the
stock book, stock ledger and minute books of the
Company;
(iv) a
certificate executed by the Seller to the effect that the
conditions set forth in Section 6.02(a) have been
satisfied;
(v) possession
of all originals and copies of agreements, instruments, documents,
deeds, books, records, files and other data and information within
the possession of the Seller or any Affiliate of the Seller
pertaining to the Company (collectively, the
“Records”); provided, however, that the Seller may
retain (A) copies of any tax returns and copies of
Records
5
relating thereto; (B) copies of
any Records that the Seller are reasonably likely to need for
complying with requirements of law; (C) copies of any Records
that in the reasonable opinion of the Seller will be required in
connection with the performance of its obligations under Article
VIII and (D) copies of any Records that also relate to the business
or operations of the Seller;
(vi) evidence
reasonably satisfactory to Buyer that the Company has repaid in
full all amounts owed under any indebtedness for borrowed money and
the Company’s assets are owned free and clear of any Liens,
other than Permitted Liens (as hereinafter defined);
(vii) the
Employment Agreement, substantially in the form attached hereto as
Exhibit B, executed by the Company and Stephen J.
DeGroat;
(viii) the
Employment Agreement, substantially in the form attached hereto as
Exhibit C, executed by the Company and William F.
Moreno;
(ix) the
Registration Rights Agreement, substantially in the form attached
hereto as Exhibit D, executed by Seller (the “Registration
Rights Agreement”);
(x)
the Investment
Representation Letter, substantially in the form attached hereto as
Exhibit E, executed by the Seller; and
(xi) evidence
reasonably satisfactory to Buyer that Buyer’s designees shall
be the only authorized signatories with respect to the
Company’s various accounts, credit lines, safe deposit boxes
or vaults set forth or required to be set forth in Schedule
3.19.
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2.03
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Deliveries by Buyer
. At or prior to the Closing, Buyer
shall deliver to the Seller:
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(i)
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the Cash Consideration;
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(ii) a
stock certificate representing the Buyer Stock issued to the
Seller;
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(iii)
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the Note, executed by the
Buyer;
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(iv) the
Registration Rights Agreement, executed by the Buyer;
and
(v) a
certificate executed by an authorized officer of the Buyer, on
behalf of the Buyer, to the effect that the conditions set forth in
Section 6.01(b) have been satisfied.
ARTICLE III. - REPRESENTATIONS
AND WARRANTIES OF THE SELLER
The Seller hereby jointly and
severally represents and warrants to Buyer that:
3.01
Corporate Existence and Qualification . Each of the Company
and the Seller is a corporation duly organized, validly existing
and in good standing under the laws of its state of incorporation;
the Company has the corporate power to own, manage, lease and hold
its
6
Properties and to carry on its
business as and where such Properties are presently located and
such business is presently conducted; and neither the character of
the Company’s Properties nor the nature of the
Company’s business requires the Company to be duly qualified
to do business as a foreign corporation in any jurisdiction outside
those identified in Schedule 3.01 attached hereto, except where the
failure to be so qualified would not have a material adverse effect
on the business, operations, prospects, Properties or financial
condition of the Company (“Material Adverse Effect”),
and, as of the Closing Date, the Company is qualified as a foreign
corporation and in good standing in each listed
jurisdiction.
3.02
Authority, Approval and Enforceability . This Agreement has
been duly executed and delivered by the Company and the Seller, and
the Seller and the Company has all requisite power and legal
capacity to execute and deliver this Agreement and all applicable
Collateral Agreements executed and delivered or to be executed and
delivered in connection with the transactions provided for hereby,
to consummate the transactions contemplated hereby and by the
Collateral Agreements, and to perform its obligations hereunder and
under the applicable Collateral Agreements. This Agreement and each
Collateral Agreement to which the Seller and/or the Company is a
party constitutes, or upon execution and delivery will constitute,
the legal, valid and binding obligation of such party, enforceable
in accordance with its terms, except as such enforcement may be
limited by general equitable principles or by applicable
bankruptcy, insolvency, moratorium, or similar laws and judicial
decisions from time to time in effect which affect creditors’
rights generally.
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3.03
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Capitalization and Corporate
Records.
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(a) Schedule
3.03(a) sets forth the authorized and outstanding capital stock of
the Company and the number of shares of capital stock owned
beneficially and of record by each stockholder of the Company. The
Shares are owned beneficially and of record by the Seller, free and
clear of any and all Liens. All of the outstanding shares of the
Company are duly authorized, validly issued, fully paid and
non-assessable and were not issued in violation of (i) any
preemptive or other rights of any Person to acquire securities of
the Company, or (ii) any applicable federal or state
securities laws, and the rules and regulations promulgated
thereunder (collectively, the “Securities Laws”). There
are no outstanding subscriptions, options, convertible securities,
rights (preemptive or otherwise), warrants, calls or agreements
relating to any shares of capital stock of the Company. The copies
of the Articles of Incorporation and Bylaws of the Company provided
to Buyer are true, accurate, and complete and reflect all
amendments made through the date of this Agreement. The
Company’s stock and minute books made available to Buyer for
review were correct and complete as of the date of such review, no
further entries have been made through the date of this Agreement,
and such minute books contain an accurate record of all shareholder
and corporate actions of the shareholders and directors (and any
committees thereof) of the Company taken by written consent or at a
meeting. All corporate actions taken by the Company have been duly
authorized or ratified. All accounts, books, ledgers and official
and other records of the Company fairly and accurately reflect in
all material respects all of the Company’s transactions,
properties, assets and liabilities.
(b) Except
in the ordinary course of its business and in an aggregate amount
of less than $250,000, the Company does not own, directly or
indirectly, any outstanding voting
7
securities of or other interests in,
or controls, any other corporation, partnership, joint venture or
other business entity.
3.04
No Seller Defaults or Consents . Except as otherwise set
forth in Schedule 3.04 hereto, the execution and delivery of this
Agreement and the applicable Collateral Agreements by the Seller
and the performance by the Seller of its obligations hereunder and
thereunder will not violate any provision of any judgment, award or
decree or any indenture, agreement or other instrument to which the
Seller is a party, or by which the properties or assets of the
Seller is bound or affected, or conflict with, result in a breach
of or constitute (with due notice or lapse of time or both) a
default under, any such indenture, agreement or other instrument,
in each case, except to the extent that any such violation, default
or breach could not reasonably be expected to delay or otherwise
materially impair the ability of the parties to consummate the
transactions contemplated by this Agreement.
3.05
No Company Defaults or Consents . Except as otherwise set
forth in Schedule 3.05 attached hereto (the “Required
Consents”), neither the execution and delivery of this
Agreement nor the carrying out of any of the transactions
contemplated hereby will:
(i) violate
or conflict with any of the terms, conditions or provisions of the
charter or bylaws of the Company or the Seller;
(ii) violate
any Legal Requirements applicable to the Company or the
Seller;
(iii) violate,
conflict with, result in a breach of, constitute a default under
(whether with or without notice or the lapse of time or both), or
accelerate or permit the acceleration of the performance required
by, or give any other party the right to terminate, any material
Contract or Permit binding upon or applicable to the
Company;
(iv) result
in the creation of any lien, charge or other encumbrance on any
Properties of the Company; or
(v) require
either the Seller or the Company to obtain or make any waiver,
consent, action, approval or authorization of, or registration,
declaration, notice or filing with, any private non-governmental
third party or any Governmental Authority.
3.06
No Proceedings . No suit, action or other proceeding is
pending or, to the Knowledge of the Seller or the Company,
threatened before any Governmental Authority seeking to restrain
the Company or the Seller or prohibit their entry into this
Agreement or prohibit the Closing, or seeking damages against the
Company or its Properties as a result of the consummation of this
Agreement.
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3.07
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Employee Benefit
Matters .
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(a) Schedule
3.07(a) provides a list and brief description of each of the
following, if any, which is sponsored, maintained or contributed to
by the Company for the benefit of the employees or agents of the
Company, or has been so sponsored, maintained or contributed to at
any time during the Company’s existence:
8
(i) each
“employee benefit plan,” as such term is defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974
(“ERISA”) (including, but not limited to, employee
benefit plans, such as foreign plans, which are not subject to the
provisions of ERISA) (“Plan”); and,
(ii) each
personnel policy, employee manual or other written statements of
rules or policies concerning employment, stock option plan,
collective bargaining agreement, bonus plan or arrangement,
incentive award plan or arrangement, vacation and sick leave
policy, severance pay policy or agreement, deferred compensation
agreement or arrangement, consulting agreement, employment contract
and each other employee benefit plan, agreement, arrangement,
program, practice or understanding which is not described in
Section 3.07(a)(i) (“Benefit Program or
Agreement”).
(b) True,
correct and complete copies of each of the Plans (if any), and
related trusts, if applicable, including all amendments thereto,
have been furnished to Buyer. There has also been furnished to
Buyer, with respect to each Plan required to file such report and
description, the three most recent reports on Form 5500 and the
summary plan description. True, correct and complete copies or
descriptions of all Benefit Programs or Agreements have also been
furnished to Buyer.
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(c)
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Except as otherwise set forth in
Schedule 3.07(c),
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(i) The
Company does not contribute to or have an obligation to contribute
to, and the Company has not at any time contributed to or had an
obligation to contribute to, a multiemployer plan within the
meaning of Section 3(37) of ERISA (“Multiemployer
Plan”) or a multiple employer plan within the meaning of
Section 413(b) or (c) of the Code.
(ii) The
Company has substantially performed all material obligations,
whether arising by operation of law or by contract, required to be
performed by it in connection with the Plans and the Benefit
Programs and Agreements, and, to the Knowledge of the Seller or the
Company, there have been no material defaults or violations by any
other party to the Plans or Benefit Programs or
Agreements;
(iii) All
reports and disclosures relating to the Plans required to be filed
with or furnished by the Company or the Seller with or to
governmental agencies, Plan participants or Plan beneficiaries have
been filed or furnished in accordance with applicable law in a
timely manner, and each Plan and each Benefit Program or Agreement
has been administered in substantial compliance with its governing
documents (except with respect to changes to the documents required
or permitted by statute, regulation or ruling for which amendments
are not yet required, including changes for which the remedial
amendment period under Section 4.01(b) of the Code
applies);
(iv) Each
of the Plans intended to be qualified under Section 401 of the Code
satisfies the requirements of such Section and has received a
favorable determination letter from the Internal Revenue Service
regarding such qualified status and has not, since receipt
of
9
the most recent favorable
determination letter, been amended or operated in a way which could
reasonably be expected to adversely affect such qualified
status;
(v) There
are no actions, suits or claims pending (other than routine claims
for benefits) or, to the Knowledge of the Seller or the Company,
threatened against, or with respect to, any of the Plans or Benefit
Programs or Agreements or their assets;
(vi) All
contributions required to be made to the Plans pursuant to their
terms and provisions and applicable law have been timely
made;
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(vii)
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No Plan is subject to Title IV of
ERISA;
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(viii) None
of the Plans nor any trust created thereunder or with respect
thereto has engaged in any “prohibited transaction” or
“party-in-interest transaction” as such terms are
defined in Section 4975 of the Code and Section 406 of ERISA which
could subject the Seller or the Company or any officer, director or
employee of either the Seller or the Company to a tax or penalty on
prohibited transactions or party-in-interest transactions pursuant
to Section 4975 of the Code or Section 502(i) of ERISA;
(ix) There
is no matter pending (other than routine qualification
determination filings) with respect to any of the Plans or Benefit
Programs or Agreements before the Internal Revenue Service, the
Department of Labor or the PBGC;
(x) No
Plan is funded by a trust which is intended to be exempt from
federal income taxation pursuant to Section 501(c)(9) of the
Code;
(xi) The
Company does not have any obligation to provide health benefits to
former employees, except as specifically required by
law;
(xii) Neither
the execution and delivery of this Agreement nor the consummation
of any or all of the transactions contemplated hereby will: (A)
entitle any current or former employee of the Company to severance
pay, unemployment compensation or any similar payment, (B)
accelerate the time of payment or vesting or increase the amount of
any compensation due to any such employee or former employee, or
(C) directly or indirectly result in any payment made to or on
behalf of any person to constitute a “parachute
payment” within the meaning of Section 280G of the
Code;
(xiii) The
Company has not incurred any liability or taken any action, and no
action or event has occurred that could cause the Company to incur
any material liability (A) under Section 412 of the Code or Title
IV of ERISA with respect to any “single-employer plan”
within the meaning of Section 4001(a)(15) of ERISA that is not a
Plan, or (B) to any Multiemployer Plan, including without
limitation on account of a partial or complete withdrawal within
the meaning of Sections 4203 and 4205 of ERISA;
(xiv) Since
January 1, 1996, there have not been any (i) work stoppages,
labor disputes or other significant controversies between the
Company and its employees, (ii) to the Knowledge of the
Seller or the Company, union grievances or organizational efforts,
or (iii)
10
unfair labor practice or labor
arbitration proceedings pending or, to the Knowledge of the Seller
or the Company, threatened.
(d) Except
as set forth in Schedule 3.07(a), the Company is not a party to any
agreement, and has not established any policy or practice,
requiring the Company to make a payment or provide any other form
of compensation or benefit to any person performing services for
the Company upon termination of such services which would not be
payable or provided in the absence of the consummation of the
transactions contemplated by this Agreement.
(e) Schedule
3.07(e) sets forth by number and employment classification the
approximate numbers of employees employed by the Company as of the
date of this Agreement, and, except as set forth therein, none of
said employees are subject to union or collective bargaining
agreements with the Company.
(f) Neither
the Buyer nor any of its Affiliates shall have any liability or
obligations under or with respect to the Workers Adjustment
Retraining Notification Act in connection with any of the
transactions contemplated in connection herewith.
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3.08
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Financial Statements; Liabilities;
Accounts Receivable.
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(a) The
Seller has delivered to Buyer true and complete copies of financial
statements with respect to the Company and its business as of and
for the years ended December 31, 2003, 2004 and 2005 and the six
months ended June 30, 2006 (the “Financial
Statements”), and said Financial Statements are attached
hereto as Schedule 3.08(a). All of such Financial Statements
present fairly the financial condition and results of operations of
the Company for the dates or periods indicated thereon. Except to
the extent described on Schedule 3.08(b), all of the Financial
Statements have been prepared in accordance with generally accepted
accounting principles (“GAAP”) consistently applied
throughout the periods indicated, except as may be otherwise
provided therein or herein.
(b) Except
for (i) the liabilities reflected on the Company’s June
30, 2006 balance sheet included with the Financial Statements
attached as Schedule 3.08(a), (ii) trade payables and accrued
expenses incurred since June 30, 2006 in the ordinary course of
business, (iii) executory contract obligations, and
(iv) the liabilities set forth in Schedule 3.08(b) attached
hereto, the Company does not have any liabilities or obligations
(whether accrued, absolute, contingent, known, unknown or
otherwise, and whether or not of a nature required to be reflected
or reserved against in a balance sheet in accordance with
GAAP).
(c) Except
as otherwise set forth in Schedule 3.08(c), the accounts receivable
reflected on the June 30, 2006 balance sheet included in the
Financial Statements referenced in Section 3.08(a) and all of the
Company’s accounts receivable arising since June 30, 2006
(the “Balance Sheet Date”) are valid receivables that
arose from bona fide transactions in the ordinary course of
business and, to the Knowledge of the Company and the Seller, are
not subject to any setoffs or counterclaims, and the goods and
services involved have been sold, delivered and fully performed to
the account obligors. Such account receivables are current and
collectible at their recorded amounts, except to the extent of any
bad debt reserve as of the Balance Sheet Date as adjusted for the
passage of time through the Closing Date in accordance with the
past practice
11
and custom of the Company (provided,
however, that the Seller does not guarantee that the Company will
ultimately collect all of the accounts receivables). Except as set
forth in Schedule 3.08(c), no such account has been assigned or
pledged to any other person, firm or corporation, and, except only
to the extent fully reserved against as set forth in the June 30,
2006 balance sheet included in such Financial Statements, no
defense or set-off to any such account has been asserted by the
account obligor or exists.
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3.09
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Absence of Certain
Changes.
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(a) Except
as otherwise set forth in Schedule 3.09(a) attached hereto, since
July 1, 2006, there has not been (specifically excluding general
economic conditions or events or circumstances that have affected
the industry in general):
(i) any
event, circumstance or change that had or might have a material
adverse effect on the business, operations, prospects, Properties,
financial condition or working capital of the Company;
(ii) any
damage, destruction or loss (whether or not covered by insurance)
that had or might reasonably be expected to have a Material Adverse
Effect; or
(iii) any
material adverse change in the Company’s sales patterns,
pricing policies, accounts receivable or accounts
payable.
(b) Except
for the transactions contemplated by this Agreement and as
otherwise set forth in Schedule 3.09(b) attached hereto, since July
1, 2006, the Company has not done any of the following:
(i) merged
into or with or consolidated with, any other corporation or
acquired the business or assets of any Person;
(ii) purchased
any securities of any Person, except in the ordinary course of
business;
(iii) created,
incurred, assumed, guaranteed or otherwise become liable or
obligated with respect to any indebtedness, or made any loan or
advance to, or any investment in, any person, except in each case
in the ordinary course of business;
(iv) made
any change in any existing election, or made any new election, with
respect to any tax law in any jurisdiction which election could
have an effect on the tax treatment of the Company or the
Company’s business operations;
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(v)
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entered into, amended or terminated
any material agreement;
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(vi) sold,
transferred, leased, mortgaged, encumbered or otherwise disposed
of, or agreed to sell, transfer, lease, mortgage, encumber or
otherwise dispose of, any Properties except (i) in the ordinary
course of business, or (ii) pursuant to any agreement specified in
Schedule 3.13;
12
(vii) settled
any claim outside the ordinary course of business or litigation, or
filed any motions, orders, briefs or settlement agreements in any
proceeding before any Governmental Authority or any
arbitrator;
(viii) incurred
or approved, or entered into any agreement or commitment to make,
any expenditures in excess of $10,000 (other than those required
pursuant to any agreement specified in Schedule 3.13);
(ix) maintained
its books of account other than in the usual, regular and ordinary
manner in accordance with generally accepted accounting principles
and on a basis consistent with prior periods or made any change in
any of its accounting methods or practices that would be required
to be disclosed under generally accepted accounting
principles;
(x) adopted
any Plan or Benefit Program or Agreement, or granted any increase
in the compensation payable or to become payable to directors,
officers or employees (including, without limitation, any such
increase pursuant to any bonus, profit-sharing or other plan or
commitment), other than merit increases to non-officer employees in
the ordinary course of business and consistent with past
practice;
(xi) suffered
any extraordinary losses or waived any rights of material
value;
(xii) made
any payment (including any dividends or distributions with respect
to the Company’s capital stock) to the Seller or forgiven any
indebtedness due or owing from the Seller to the
Company;
(xiii) (A) accelerated
receivables, (B) delayed payables, or (C) changed in any
material respect the Company’s practices in connection with
the payment of payables and/or the collection of
receivables;
(xiv) engaged
in any one or more activities or transactions with an Affiliate or
outside the ordinary course of business;
(xv) declared,
set aside or paid any dividends, or made any distributions or other
payments in respect of its equity securities, or repurchased,
redeemed or otherwise acquired any such securities;
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(xvi)
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amended its Articles of
Incorporation or Bylaws;
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(xvii) issued any
capital stock or other securities, or granted, or entered into any
agreement to grant, any options, convertible rights, other rights,
warrants, calls or agreements relating to its capital stock;
or
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(xviii)
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committed to do any of the
foregoing.
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3.10
Compliance with Laws . Except as otherwise set forth in
Schedule 3.10(1), the Company is and has been in compliance with
any and all Legal Requirements applicable to the Company, other
than failures to so comply that would not have a Material Adverse
Effect.
13
Except as otherwise set forth in
Schedule 3.10(2), the Company (x) has not received or entered
into any citations, complaints, consent orders, compliance
schedules, or other similar enforcement orders or received any
written notice from any Governmental Authority or any other written
notice that would indicate that the Company is not currently in
compliance with all such Legal Requirements, except for failures to
so comply that would not have a Material Adverse Effect, and
(y) is not in default under, and no condition exists (whether
covered by insurance or not) that with or without notice or lapse
of time or both would constitute a default under, or material
breach or violation of, any Legal Requirement or Permit applicable
to the Company. Without limiting the generality of the foregoing,
the Company has not received notice of and there is no reasonable
basis for, any claim, action, suit, investigation or proceeding
that might result in a finding that the Company is not or has not
been in compliance in all material respects with Legal Requirements
relating to (a) the development, testing, servicing,
manufacture, packaging, distribution and marketing of products
produced or serviced by the Company, (b) employment, safety
and health, and (c) environmental protection, building, zoning
and land use.
3.11
Litigation . Except as otherwise set forth in Schedule 3.11,
there are no claims, actions, suits, investigations or proceedings
against the Company pending or, to the Knowledge of the Seller or
the Company, threatened in any court or before or by any
Governmental Authority, or before any arbitrator, that might have a
Material Adverse Effect (whether covered by insurance or not) and
there is no reasonable basis for any such claim, action, suit,
investigation or proceeding. Schedule 3.11 also includes a true and
correct listing of all material actions, suits, investigations,
claims or proceedings that were pending, settled or adjudicated
since July 1, 1996.
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3.12
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Ownership of Company
Properties.
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(a) Except
as provided under the provisions of the agreements described in
Schedule 3.12(a), the Company has and will have as of the Closing
Date legal and beneficial ownership of its Properties, free and
clear of any and all Liens, other than Permitted Liens.
(b) The
Company does not currently own nor has it ever owned any real
property or any interest therein (including without limitation any
option or other right or obligation to purchase any real property
or any interest therein). Schedule 3.12(b) sets forth the only
leases, licenses or similar agreements relating to the
Company’s use or occupancy of real estate owned by a third
party (the “Leases”), true and correct copies of which
has previously been furnished to Buyer (the “Leased
Premises”). The Leases are in full force and effect and have
not been amended, and the Company is not in default or breach under
the Leases (except to the extent that consent to the consummation
of the transactions contemplated by this Agreement may be required
as disclosed on Schedule 3.12(b)), and, to the Knowledge of the
Seller or the Company, no other party thereto is in default or
breach under the Leases. No event has occurred which, with the
passage of time or the giving of notice or both, would cause a
material breach of or default under the Leases (except to the
extent that consent to the consummation of the transactions
contemplated by this Agreement may be required as disclosed on
Schedule 3.12(b). With respect to the Leased Premises: (i) the
Company has a valid leasehold interest in the Leased Premises, free
and clear of any Liens, covenants and easements or title defects
that have had or could have a material adverse effect on the
Company’s use and occupancy of the Leased
14
Premises; (ii) the portions of
the buildings located on the Leased Premises that are used in the
business of the Company are each in good repair and condition,
normal wear and tear excepted, and are in the aggregate sufficient
to satisfy the Company’s current and reasonably anticipated
normal business activities as conducted thereat; (iii) the
Leased Premises (a) have direct access to public roads or
access to public roads by means of a perpetual access easement,
such access being sufficient to satisfy the current transportation
requirements of the business presently conducted at such parcel;
and (b) are served by all utilities in such quantity and
quality as are reasonably sufficient to satisfy the current normal
business activities conducted at such parcel; and (iv) the
Company has not received notice of (a) any condemnation,
eminent domain or similar proceeding affecting any portion of the
Leased Premises or any access thereto, and, to the Knowledge of the
Seller or the Company, no such proceedings are contemplated, or (b)
any special assessment which may affect the Leased
Premises.
(c
) Set forth on
Schedule 3.12(c) is a list and description of all material foreign
and domestic patents, patent rights, trademarks, service marks,
trade names, brands and copyrights (whether or not registered and,
if applicable, including pending applications for registration)
owned, Used, licensed or controlled by the Company (such rights,
together with the goodwill associated therewith, the
“Intellectual Property Rights”). The Company owns or
has the right to use and shall as of the Closing Date own or have
the right to use the Intellectual Property Rights, except where the
failure to own or have such rights would have a Material Adverse
Effect. The Company owns or has the right to use and shall as of
the Closing Date own or have the right to use any and all
information, know-how, trade secrets, software, formulae, methods,
processes and other intangible properties that are necessary or
customarily Used by the Company for the ownership, management or
operation of its Properties, including, but not limited to, the
rights listed on Schedule 3.12(c) (the “Intangible
Rights” and collectively with the Intellectual Property
Rights, the “Intellectual Property”). Except as set
forth on Schedule 3.12(c): (i) the Company is the sole and
exclusive owner of all right, title and interest in and to all of
the Intellectual Property Rights, and the exclusive right to use
and license the same, free and clear of any claim or conflict with
the intellectual property rights of others; (ii) no royalties,
honorariums or fees are payable by the Company to any person by
reason of the ownership or use of any of the Intellectual Property;
(iii) there have been no claims made against the Company
asserting the invalidity, abuse, misuse, or unenforceability of any
of the Intellectual Property and no reasonable grounds for any such
claims exist; (iv) the Company has not made any claim of any
violation or infringement by others of any of its Intellectual
Property or interests therein and, to the Knowledge of the Seller
or the Company, no reasonable grounds for any such claims exist;
(v) the Company has not received any notice that it is in
conflict with or infringing upon the asserted intellectual property
rights of others in connection with the Intellectual Property, and,
to the Knowledge of the Seller and the Company, neither the use of
the Intellectual Property nor the operation of the Company’s
businesses is infringing or has infringed upon any intellectual
property rights of others; (vi) the Intellectual Property is
sufficient and includes all intellectual property rights necessary
for the Company to lawfully conduct its business as presently being
conducted; (vii) no interest in any of the Intellectual
Property has been assigned, transferred, licensed or sublicensed by
the Company to any person; (viii) to the extent that any item
constituting part of the Intellectual Property has been registered
with, filed in or issued by, any Governmental Authority, such
registrations, filings or issuances are listed on Schedule 3.12(c)
and were duly made and remain in full force and effect; and
(ix) to the Knowledge of the Seller or the Company, there has
not been any act or failure to act by the Company or any of
its
15
directors, officers, employees,
attorneys or agents during the prosecution or registration of, or
any other proceeding relating to, any of the Intellectual Property
or of any other fact which could render invalid or unenforceable,
or negate the right to issuance of any of the Intellectual
Property. To the extent any of the Intellectual Property
constitutes proprietary or confidential information, the Company
has taken commercially reasonable measures to adequately safeguard
such information from disclosure.
(d) Set
forth on Schedule 3.12(d) is a list of all material
authorizations, consents, approvals, franchises, licenses and
permits required by any Person (other than a Governmental
Authority) for the operation of the business of the Company as
presently operated (the “Other Person Authorizations”).
All of the Other Person Authorizations have been duly issued or
obtained and are in full force and effect, and the Company is in
material compliance with the terms of all the Other Person
Authorizations. To the Knowledge of the Seller or the Company,
there are not any facts which could reasonably be expected to cause
them to believe that the Other Person Authorizations will not be
renewed by the appropriate Person in the ordinary course. Each of
the Other Person Authorizations will continue in full force and
effect after the consummation of the transactions contemplated by
this Agreement, in each case without (i) the occurrence of any
breach, default or forfeiture of rights thereunder, or
(ii) the consent, approval, or act of, or the making of any
filings with, any Person.
(a) Except
as otherwise set forth in Schedule 3.13, the Company is not a party
to or bound by any of the following, whether written or
oral:
(i) any
Contract that cannot by its terms be terminated by the Company with
30 days’ or less notice without penalty or whose term
continues beyond one year after the date of this
Agreement;
(ii) contract
or commitment for capital expenditures by the Company in excess of
$10,000 per calendar quarter in the aggregate;
(iii) lease
or license with respect to any Properties, real or personal,
whether as landlord, tenant, licensor or licensee;
(iv) agreement,
contract, indenture or other instrument relating to the borrowing
of money or the guarantee of any obligation or the deferred payment
of the purchase price of any Properties;
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(v)
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partnership agreement;
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(vi) contract
with any Affiliate of the Company (including the Seller) relating
to the provision of goods or services by or to the
Company;
(vii) agreement
for the sale of any assets other than products sold in the ordinary
course of business that in the aggregate have a net book value on
the Company’s books of greater than $25,000;
16
(viii) agreement
that purports to limit the Company’s freedom to compete
freely in any line of business or in any geographic
area;
(ix) preferential
purchase right, right of first refusal, or similar agreement;
or
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(x)
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other Contract that is material to
the business of the Company.
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(b) All
of the Contracts listed or required to be listed in Schedule 3.13
are valid, binding and in full force and effect, and neither the
Company nor the Seller have been notified or advised by any party
thereto of such party’s intention or desire to terminate or
modify any such Contract in any respect, except as disclosed in
Schedule 3.13. Neither the Company nor, to the Knowledge of the
Seller or the Company, any other party is in breach of any of the
terms or covenants of any Contract listed or required to be listed
in Schedule 3.13. Following the consummation of the transactions
contemplated by this Agreement, the Company will continue to be
entitled to all of the benefits of the Company under each Contract
listed or required to be listed in Schedule 3.13.
(c) The
Company is not a party to or bound by any Contract or Contracts the
terms of which were arrived at by or otherwise reflect
less-than-arm’s-length negotiations or bargaining.
3.14
Insurance . Schedule 3.14 hereto is a complete and correct
list of all insurance policies presently in effect that relate to
the Company or its Properties, all of which have been in full force
and effect from and after the date(s) set forth on Schedule 3.14.
Such policies are sufficient for compliance by the Company with all
applicable Legal Requirements and all material Contracts. None of
the insurance carriers has indicated to the Company an intention to
cancel any such policy. The Company has no claim pending or
anticipated against any of the insurance carriers under any of such
policies and, to the Knowledge of the Seller or the Company, there
has been no actual or alleged occurrence of any kind which could
reasonably be expected to give rise to any such claim.
3.15
Agreements with Regulatory Agencies . As of the date of this
Agreement, except as set forth in Schedule 3.15, the Company is not
subject to any cease-and-desist or other Order issued by, or is a
party to any written agreement, consent agreement, or memorandum of
understanding with, or is a party to any commitment letter or
similar undertaking to, or is subject to any Order or directive by,
or is a recipient of any supervisory letter from or has adopted any
board resolutions at the request of any Government Entity that
materially restricts the conduct of the Business or that relates to
the capital adequacy, its credit policies, its management or the
Business (each, a “Regulatory Agreement”). The Company
has not been advised since January 1, 2005 by any Government Entity
that it is considering issuing or requesting any Regulatory
Agreement. There is no pending or, to the Knowledge of the Seller,
threatened regulatory investigation involving the Business. After
the date of this Agreement, no matters referred to in this Section
have arisen.
3.16
Equipment and Other Tangible Property . The Company’s
equipment, furniture, machinery, vehicles, structures, fixtures and
other tangible property included in the Properties
17
(the “Tangible Company
Properties”) is suitable for the purposes for which intended
and in good operating condition and repair consistent with normal
industry standards, except for ordinary wear and tear, and except
for such Tangible Company Properties as shall have been taken out
of service on a temporary basis for repairs or replacement
consistent with the Company’s prior practices and normal
industry standards.
3.17
Consents and Approvals . Except for (i) consents,
authorizations, approvals, filings, exemptions, registration and
waivers in connection with compliance with the applicable
provisions of federal, state and foreign laws (including without
limitation, securities and insurance laws) relating to the
regulation of broker-dealers, securities, commodities and
investment advisors and any applicable domestic or foreign industry
self-regulatory organization (“SRO”), and the rules of
the NASD, the NYSE and other securities exchanges, (ii) consents
approvals and notices required under the Investment Advisers Act of
1940, as amended (the “Advisers Act”) and the
Investment Company Act of 1940, as amended (the “1940
Act”), (iii) such additional consents and approvals set forth
in Schedule 3.17, no consent, authorization, approval, filing,
exemption, waiver or registration with, any Government Entity or
any third Person is required to be made or obtained by the Company
or the Seller in connection with the execution, delivery and
performance of this Agreement and the consummation of the
transactions contemplated hereby.
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3.18
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Permits; Environmental
Matters .
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(a) Except
as otherwise set forth in Schedule 3.18(a), the Company has all
Permits necessary for the Company to own, operate, use and/or
maintain its Properties and to conduct its business and operations
as presently conducted. Except as otherwise set forth in Schedule
3.18(a), all such Permits are in effect, no proceeding is pending
or, to the Knowledge of the Seller or the Company, threatened to
modify, suspend or revoke, withdraw, terminate, or otherwise limit
any such Permits, and no administrative or governmental actions
have been taken or, to the Knowledge of the Seller or the Company,
threatened in connection with the expiration or renewal of such
Permits which could materially adversely affect the ability of the
Company to own, operate, use or maintain any of its Properties or
to conduct its business and operations as presently conducted.
Except as otherwise set forth in Schedule 3.18(a), (i) no
violations have occurred that remain uncured, unwaived, or
otherwise unresolved, or are occurring in respect of any such
Permits, other than immaterial violations, and (ii) no
circumstances exist that would prevent or delay the obtaining of
any requisite consent, approval, waiver or other authorization of
the transactions contemplated hereby with respect to such Permits
that by their terms or under applicable law may be obtained only
after Closing.
(b) There
are no claims, liabilities, investigations, litigation,
administrative proceedings, whether pending or, to the Knowledge of
the Seller or the Company, threatened, or judgments or orders
relating to any Hazardous Materials (collectively called
“Environmental Claims”) asserted or threatened against
the Company or relating to any real property currently or formerly
owned, leased or otherwise Used by the Company. Neither the Company
nor, to the Knowledge of the Seller or the Company, any prior
owner, lessee or operator of said real property, has caused or
permitted any Hazardous Material to be used, generated, reclaimed,
transported, released, treated, stored or disposed of in a manner
which could reasonably form the
18
basis for an Environmental Claim
against the Company or the Buyer. The Company has not assumed any
liability of any Person for cleanup, compliance or required capital
expenditures in connection with any Environmental Claim.
(c) No
Hazardous Materials are or were stored or otherwise located, and no
underground storage tanks or surface impoundments are or were
located, on real property currently or formerly owned, leased or
Used by the Company or, to the Knowledge of the Company or the
Seller, on adjacent parcels of real property, and no part of such
real property or, to the Knowledge of the Company or the Seller,
any part of such adjacent parcels of real property, including the
groundwater located thereon, is presently contaminated by Hazardous
Materials.
(d) The
Company has been and is currently in compliance with all applicable
Environmental Laws, including obtaining and maintaining in effect
all Permits required by applicable Environmental Laws.
3.19
Banks . Schedule 3.19 sets forth (i) the name of each
bank, trust company or other financial institution and stock or
other broker with which the Company has an account, credit line or
safe deposit box or vault, (ii) the names of all persons
authorized to draw thereon or to have access to any safe deposit
box or vault, (iii) the purpose of each such account, safe
deposit box or vault, and (iv) the names of all persons
authorized by proxies, powers of attorney or other like instrument
to act on behalf of the Company in matters concerning any of its
business or affairs. Except as otherwise set forth in Schedule
3.19, no such proxies, powers of attorney or other like instruments
are irrevocable.
3.20
Customers . Schedule 3.20 sets forth the ten largest
customers of the Company based on dollar amount of Company revenues
received by the Company during each of the years ended December 31,
2004 and 2005, together with the dollar amount of services sold by
the Company to each such customer during each such period. Except
as otherwise set forth in Schedule 3.20, to the Knowledge of the
Company or the Seller, the Company maintains good relations with
all customers listed or required to be listed in Schedule 3.20 as
well as with governments, partners, financing sources and other
parties with whom the Company has significant relations, and no
such party has canceled, terminated or made any threat to the
Company to cancel or otherwise terminate its relationship with the
Company or to materially decrease its direct or indirect usage of
the services of the Company.
3.21
Absence of Certain Business Practices . Except as set forth
in Schedule 3.21, neither the Company, the Seller nor any other
Affiliate or agent of the Company, or, to the Knowledge of the
Seller and the Company, any other person acting on behalf of or
associated with the Company, acting alone or together, has:
(a) received, directly or indirectly, any rebates, payments,
commissions, promotional allowances or any other economic benefits,
regardless of their nature or type, from any customer, supplier,
employee or agent of any customer or supplier, official or employee
of any government (domestic or foreign), or any political party or
candidate for office (domestic or foreign) or other person; or
(b) directly or indirectly, given or agreed to give, offered
to give, promised to give, or authorized the giving or offering of
any money, gift, benefit, or anything of value to any customer,
supplier, employee or agent of any customer or supplier, official
or employee of any government (domestic or foreign), or any
political party or
19
candidate for office (domestic or
foreign), or other person who was, is or may be in a position to
help or hinder the business of the Company (or assist the Company
in connection with any actual or proposed transaction) (all of
which are hereinafter referred to as “recipient”) which
(i) may subject the Company to any damage or penalty in any
civil, criminal or governmental litigation or proceeding,
(ii) if not given in the past, may have had a material adverse
effect on the assets, business, operations or prospects of the
Company, (iii) if not continued in the future, may materially
and adversely affect the assets, business, operations or prospects
of the Company, (iv) was intended to influence the recipient with
respect to any act or decision in the recipient’s official
capacity, (v) was intended to induce the recipient to do or omit to
do any act in violation of the recipient’s lawful duty, (vi)
was intended to secure any improper advantage, or (vii) was
intended to induce the recipient to use recipient’s influence
to affect or influence any government act or decision.
3.22
Regulatory Matters . The Company is duly registered,
qualified to do business and in good standing as a broker-dealer
with the Securities and Exchange Commission (the “SEC”)
and with the appropriate state agency in each state in which the
conduct of the Business requires such registration and
qualification, is duly registered as an investment adviser with the
states listed on Schedule 3.22 under the respective securities act
of each such state as required under the Investment Advisers Act of
1940 (the “Investment Advisers Act”), and is a member
in good standing of the National Association of Securities Dealers,
Inc. (the “NASD”). The Company has filed all reports,
registrations and statements, together with any amendments required
to be made with respect thereto, that they were required to be
filed by them with any Government Entity since January 1, 2001, and
have paid all fees and assessments due and payable in connection
therewith, except where the failure to file such report,
registration or statement or to pay such fees and assessment,
either individually or in the aggregate, is not reasonably likely
to have a Material Adverse Effect. There is no material unresolved
violation, criticism or exception by any Government Entity with
respect to any report or statement relating to any examinations of
the Company.
(a) The
Company is not a party to or bound by any and, there are no,
agreements or arrangements on behalf of any officer, director or
employee of the Company providing for severance payments,
accelerated vesting or similar benefits following termination of
their employment or for any payment, accelerated vesting or other
benefits to such Person contingent upon the execution of this
Agreement or the Closing. There are no collective bargaining
agreements applicable to the employees of the Company.
(b) There
is no unfair labor practice charge or complaint or any similar
matter involving the employees of the Business pending or, to
Seller’s Knowledge, threatened before any Government
Entity.
(c) There
are no investigations, administrative proceedings or formal
complaints of discrimination (including discrimination based upon
sex, age, marital status, race, national origin, sexual preference,
handicap or veteran status) pending or, to Seller’s
Knowledge, threatened before the Equal Employment Opportunity
Commission or any other Government Entity involving any employees
of the Company.
20
(d) Schedule
3.23(d) contains a list of the names and annual rates of
compensation of the directors and officers of the Company whose
rates of compensation, on an annualized basis, during the year
ended December 31, 2005 (including base salary, bonus,
commissions, and incentive pay) exceeded, or are expected to exceed
for the year ending December 31, 2006, $100,000. Schedule 3.23(d)
also summarizes the bonus, profit sharing, percentage compensation,
automobile, club membership, and other like benefits, if any, paid
or payable by to such directors, officers or employees from January
1, 2003 through the date hereof. Schedule 3.23(d) also contains a
brief description of all material terms of employment agreements
and confidentiality agreements to which the Company is a party and
a list by individual of the amount of all severance benefits which
any such director, officer or employee is or may be entitled to
receive and the amount of liquidated damages that such director,
officer or employee may be obligated to pay to the Company under
such employment agreements. Seller has delivered to Buyer accurate
and complete copies of all such employment agreements,
confidentiality agreements, and all other agreements, plans, and
other instruments under which such directors, officers and
employees are entitled to receive benefits of any
nature.
(e) No
arbitration or Order applicable to the Company in any way will
limit or restrict the relocation or closing of any operations or
facilities of or involving the Company.
(f) Except
as set forth in Schedule 3.23(f), the employment of each such
director, officer and employee is terminable at the will of the
Company. Seller has not received notice that any officer or key
employee, or that any group of employees, intends to terminate his
or her employment with the Company, and Seller does not have a
present intention to terminate the employment of any of the
foregoing.
3.24
Transactions With Affiliates . Except as set forth on
Schedule 3.24 and except for normal advances to employees
consistent with past practices, payment of compensation for
employment to employees consistent with past practices, and
participation in scheduled Plans or Benefit Programs and Agreements
by employees, the Company has not purchased, acquired or leased any
property or services from, or sold, transferred or leased any
property or services to, or loaned or advanced any money to, or
borrowed any money from, or entered into or been subject to any
management, consulting or similar agreement with, or engaged in any
other significant transaction with the Seller or any other officer,
director or shareholder of the Company or any of their respective
Affiliates. Except as set forth on Schedule 3.24, neither the
Seller or any other Affiliate of the Company is indebted to the
Company for money borrowed or other loans or advances, and the
Company is not indebted to any such Affiliate.
3.24
Other Information . No repr
