Stock Purchase Agreement and Share Exchange between Tidalwave Holdings Inc. and First American Mortgage Securities, Inc.
This agreement is between Tidalwave Holdings Inc. and First American Mortgage Securities, Inc. (FAMS), along with the FAMS shareholder. Under the agreement, Tidalwave will acquire FAMS, making it a wholly owned subsidiary. Both companies agree to the terms and conditions for the acquisition, including representations about their corporate status, capitalization, and legal compliance. The agreement outlines the obligations of each party and requires certain approvals and filings to complete the transaction. The effective date is October 27, 2000.
STOCK PURCHASE AGREEMENT AND SHARE EXCHANGE
by and among
TIDALWAVE HOLDINGS INC. a Florida Corporation
and
FIRST AMERICAN MORTGAGE SECURITIES, INC. a Florida Corporation
Effective as of October 27, 2000
STOCK PURCHASE AGREEMENT AND SHARE EXCHANGE
THIS STOCK PURCHASE AGREEMENT AND SHARE EXCHANGE, made and entered into this 27 day of October, 2000, by and among Tidalwave Holdings Inc., a Florida corporation with its principal place of business located at 1831 N.E. 45th Street, Ft. Lauderdale, Florida 33308 ("Tidalwave"), and First American FAMS Securities, Inc., with its principal place of business at 601 Cleveland Street, Suite 370, Clearwater, Florida 33755 ("FAMS") and the individual listed on Exhibit "A" attached hereto and specifically incorporated herein by this reference (the "FAMS Shareholder").
Premises
A. This Agreement provides for the acquisition of FAMS by TIDALWAVE whereby FAMS shall become a wholly owned subsidiary of TIDALWAVE.
B. The boards of directors of TIDALWAVE and FAMS have determined, subject to the terms and conditions set forth in this Agreement, that the transaction contemplated hereby is desirable and in the best interests of its stockholders, respectively. This Agreement is being entered into for the purpose of setting forth the terms and conditions of the proposed acquisition.
Agreement
NOW, THEREFORE, on the stated premises and for and in consideration of the mutual covenants and agreements hereinafter set forth and the mutual benefits to the parties to be derived herefrom, it is hereby agreed as follows:
ARTICLE I
REPRESENTATIONS, COVENANTS AND WARRANTIES OF TIDALWAVE
As an inducement to and to obtain the reliance of FAMS, TIDALWAVE represents and warrants as follows:
Section 1.1 Organization. TIDALWAVE is a corporation duly organized, validly existing, and in good standing under the law of Florida and has the corporate power and is duly authorized, qualified, franchised and licensed under all applicable laws, regulations, ordinances and orders of public authorities to own all of its properties and assets and to carry on its business in all material respects as it is now being conducted, including qualification to do business as a foreign corporation in the jurisdiction in which the character and location of the assets owned by it or the nature of the business transacted by it requires qualification. Included in the TIDALWAVE Schedule (as hereinafter defined) are complete and correct copies of the articles of incorporation, bylaws and amendments thereto of TIDALWAVE as in effect on the date hereof. The execution and delivery of this Agreement does not and the consummation of the transactions contemplated by this Agreement in accordance with the terms hereof will not violate any provision of TIDALWAVE's articles of incorporation or bylaws. TIDALWAVE has full power, authority and legal right and has taken all action required by law, its articles of incorporation, its bylaws or otherwise to authorize the execution and delivery of this Agreement.
Section 1.2 Capitalization. The authorized capitalization of TIDALWAVE consists of 100,000,000 Common Shares, $0.001 par value per share. As of the date hereof, TIDALWAVE has 50,463,066 common shares issued and outstanding. Following the signing of this Stock Purchase Agreement, and a majority vote by the shareholders of Tidalwave Holdings Inc., a Certificate of Amendment will be filed with the state of Florida adding 50,000,000 Preferred Shares to Tidalwave Holdings Inc.
All issued and outstanding shares are legally issued, fully paid and nonassessable and are not issued in violation of the preemptive or other rights of any person. TIDALWAVE has no other securities or options authorized or issued, except for the following: It presently has 350,000 warrants outstanding at an exercise price of $2.00 per share, expiring on December 31, 2000, 501,337 options at an exercise price of $0.15 per share, expiring on April 1, 2001 and 424,208 options at an exercise price of $0.15 per share, expiring on October 1, 2001. Any of the above warrants and options can be extended at TIDALWAVE's discretion.
Section 1.3 Subsidiaries and Predecessor Corporations. TIDALWAVE does not have any other subsidiaries. TIDALWAVE owns 10% of Citizen's Title Services, Inc. a Florida based title insurance agent.
Section 1.4 Litigation and Proceedings. To the best of TIDALWAVE'S knowledge and belief, there are no actions, suits, proceedings or investigations pending or threatened by or against TIDALWAVE or affecting TIDALWAVE or its properties, at law or in equity, before any court or other governmental agency or instrumentality, domestic or foreign or before any arbitrator of any kind that would have a material adverse effect on the business, options, financial condition or income of TIDALWAVE. TIDALWAVE does not have any knowledge of any default on its part with respect to any judgment, order, writ, injunction, decree, award, rule or regulation of any court, arbitrator or governmental agency or instrumentality or of any circumstances which, after reasonable investigation, would result in the discovery of such a default.
Section 1.5 Material Contract Defaults. To the best of TIDALWAVE'S knowledge and belief, TIDALWAVE is not in default in any material respect under the terms of any outstanding contract, agreement, lease or other commitment which is material to the business, operations, properties, assets or condition of TIDALWAVE, and there is no event of default in any material respect under any such contract, agreement, lease or other commitment in respect of which TIDALWAVE has not taken adequate steps to prevent such a default from occurring.
Section 1.6 No Conflict With Other Instruments. The execution of this Agreement and the consummation of the transactions contemplated by this Agreement will not result in the breach of any term or provision of, or constitute an event of default under, any material indenture, FAMS, deed of trust or other material contract, agreement or instrument to which TIDALWAVE is a party or to which any of its properties or operations are subject.
Section 1.7 Governmental Authorizations. To the best of TIDALWAVE'S knowledge, TIDALWAVE has all licenses, franchises, permits or other governmental authorizations legally required to enable TIDALWAVE to conduct its business in all material respects as conducted on the date hereof. TIDALWAVE warrants that its issued and outstanding shares of common stock have been issued in compliance with all state and federal securities laws, and that no authorization, approval, consent or order of, or registration, declaration or filing with, any court or other governmental body is required in connection with the execution and delivery by TIDALWAVE of this Agreement and the consummation of TIDALWAVE of the transactions contemplated hereby. Provided, however, that certain filings may be required for compliance with NASD requirements after the merger, which filings will be completed by TIDALWAVE.
ARTICLE II REPRESENTATIONS, COVENANTS AND WARRANTIES OF FAMS
As an inducement to, and to obtain the reliance of TIDALWAVE, FAMS represents and warrants as follows:
Section 2.1 Organization. FAMS is a corporation duly organized, validly existing and in good standing under the laws of Florida and has the corporate power and is duly authorized, qualified, franchised and licensed under all applicable laws, regulations, ordinances and orders of public authorities to own all of its properties and assets and to carry on its business in all material respects as it is now being conducted, including qualification to do business as a foreign entity in the country or states in which the character and location of the assets owned by it or the nature of the business transacted by it requires qualification. Included in the FAMS Schedules (as hereinafter defined) are complete and correct copies of the articles of incorporation, bylaws and amendments thereto of FAMS as in effect on the date hereof. The execution and delivery of this Agreement does not and the consummation of the transactions contemplated by this Agreement in accordance with the terms hereof will not, violate any provision of FAMS's certificate of incorporation or bylaws. FAMS has full power, authority and legal right and has taken all action required by law, it articles of incorporation, bylaws or otherwise to authorize the execution and delivery of this Agreement
Section 2.2 Capitalization. The authorized capitalization of First American Mortgage Securities, Inc. consists of 5,000,000 common shares, $1.00 par value and 1,450,000 non-voting preferred shares, $1.00 par value. As of the date hereof, there are 2,000,400 common shares and 1,450,000 non-voting preferred shares outstanding of First American Mortgage Securities, Inc., all of which shares have been legally issued, partially paid, and are nonassessable.
Section 2.3 Subsidiaries. First American Mortgage Securities, Inc. (FAMS) which also does business as First Mortgage Securities (FMS) and does not have any subsidiaries.
Section 2.4 Tax Matters; Books & Records
(a) The books and records, financial and others, of FAMS are in all material respects complete and correct and have been maintained in accordance with good business accounting practices; and
(b) FAMS has no liabilities with respect to the payment of any country, federal, state, county, local or other taxes (including any deficiencies, interest or penalties), except for current taxes incurred in the ordinary course of business.
Section 2.5 Information. The information concerning FAMS as set forth in this Agreement and in the FAMS Schedules is complete and accurate in all material respects and does not contain any untrue statement of a material fact or omit to state a material fact required to make the statements made, in light of the circumstances under which they were made, not misleading.
Section 2.6 Absence of Certain Changes or Events. Except as described herein or in the FAMS Schedules, since October 1, 2000:
(a) FAMS has not: (i) amended its certificate of incorporation or bylaws; (ii) waived any rights of value which in the aggregate are extraordinary or material considering the business of FAMS (iii) made any material change in its method of management, operation or accounting; or (iv) made any accrual or arrangement for or payment of bonuses or special compensation of any kind or any severance or termination pay to any present or former officer or employee,
(b) FAMS has not: (i) granted or agreed to grant any options, warrants or other rights for its certificates, bonds or other corporate securities calling for the issuance thereof, which option, warrant or other right has not been canceled as of the Closing Date; (ii) borrowed or agreed to borrow any funds or incurred or become subject to, any material obligation or liability (absolute or contingent) except liability incurred in the ordinary course of business, and
(c) to the best knowledge of FAMS, it has not become subject to any law or regulation which materially and adversely affects, or in the future may adversely affect, the business, operations, properties, assets or condition of FAMS.
Section 2.7 Title and Related Matters: FAMS has good and marketable title to and is the sole and exclusive owner of all of its properties, inventory, interests in properties and assets, real and personal (collectively, the "Assets") which are reflected in the most recent FAMS balance sheet and the FAMS Schedules or acquired after that date (except properties, interests in properties and assets sold or otherwise disposed of since such date in the ordinary course of business), free and clear of all liens, pledges, charges or encumbrances. Except as set forth in the FAMS schedules, FAMS owns free and clear of any liens, claims, encumbrances, royalty interests or other restrictions or limitations of any nature whatsoever and all procedures techniques, marketing plans, business plans, methods of management or other information utilized in connection with FAMS's business. Except as set forth in the FAMS Schedules, no third party has any right to, and FAMS had not received any notice of infringement of or conflict with asserted rights of others with respect to any product, technology, data, trade secrets, know-how, proprietary techniques, trademarks, service marks, trade names or copyrights which, singly or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would have a materially adverse effect on the business, operations, financial conditions or income of FAMS or any material portion of its properties, assets or rights.
Section 2.8 Litigation and Proceedings. There are no actions, suits or proceedings pending or, to the best of FAMS's knowledge and belief, threatened by or against or affecting FAMS, at law or in equity, before any court or other governmental agency or instrumentality, domestic or foreign or before any arbitrator of any kind that would have a material adverse effect on the business, operations, financial condition, income or business prospects of FAMS. FAMS does not have any knowledge of any default on its part with respect to any judgment, order, writ, injunction, decree, award, rule or regulation of any court, arbitrator or governmental agency or instrumentality.
Section 2.9 Contracts. On the Closing Date:
(a) Except for warranties given in connection with the sale of its inventory; leases of its retail location and "at will" employment contracts with store personnel, advertising agreements and other agreements entered into in the normal course of business, there are no material contracts, agreements, franchises, license agreements, or other commitments to which FAMS is a party or by which it or any of its properties are bound;
(b) FAMS is not a party to any contract, agreement, commitment or instrument or subject to any charter or other corporate restriction or any judgment, order, writ, injunction, decree or award which materially and adversely effects, or in the future may (as far as FAMS can now foresee) materially and adversely effect, the business, operations, properties, assets or conditions of FAMS; and
(c) FAMS is not a party to any material oral or written: (i) contract for the employment of any officer or employee, except "at will" employment contracts with all employees; (ii) profit sharing, bonus, deferred compensation, stock option, severance pay, pension, benefit or retirement plan, agreement or arrangement covered by Title IV of the Employee Retirement Income Security Act, as amended; (iii) FAMS is not indebted and has not guaranteed any indebtedness except those disclosed on the financial statements heretofore provided to TIDALWAVE (iv) consulting or other contract with an unexpired term of more than one year or providing for payments in excess of $10,000 in the aggregate; (v) collective bargaining agreement; (vi) contract, agreement, or other commitment involving payments by it for more than $10,000 in the aggregate (vii) except for a promissory note of $60,000 owed to the Officers and Directors of FAMS with no set repayment schedule.
Section 2.10 No Conflict With Other Instruments. The execution of this Agreement and the consummation of the transactions contemplated by this Agreement will not result in the breach of any term or provision of, or constitute an event of default under, any material indenture, FAMS, deed of trust or other material contract, agreement or instrument to which FAMS is a party or to which any of its properties or operations are subject.
Section 2.11 Material Contract Defaults. To the best of FAMS's knowledge and belief, FAMS is not in default in any material respect under the terms of any outstanding contract, agreement, lease or other commitment which is material to the business, operations, properties, assets or condition of FAMS, and there is no event of default in any material respect under any such contract, agreement, lease or other commitment in respect of which FAMS has not taken adequate steps to prevent such a default from occurring.
Section 2.12 Governmental Authorizations. To the best of FAMS's knowledge, FAMS has all licenses, franchises, permits and other governmental authorizations that are legally required to enable it to conduct its business operations in all material respects as conducted on the date hereof. Except for compliance with federal and state securities or corporation laws, no authorization, approval, consent or order of, or registration, declaration or filing with, any court or other governmental body is required in connection with the execution and delivery by FAMS of the transactions contemplated hereby.
Section 2.13 Compliance With Laws and Regulations. To the best of FAMS's knowledge and belief, FAMS has complied with all applicable statutes and regulations of any federal, state or other governmental entity or agency thereof, except to the extent that noncompliance would not materially and adversely affect the business, operations, properties, assets or condition of FAMS or would not result in FAMS's incurring any material liability.
Section 2.14 Insurance. All of the insurable properties of FAMS are insured for FAMS's benefit in accordance with the insurance policies disclosed in the FAMS Schedules under valid and enforceable policy or policies containing substantially equivalent coverage and will be outstanding and in full force at the Closing Date.
Section 2.l5 Approval of Agreement. The holders of a majority of the Common Voting Shares outstanding of FAMS and the Board of Directors have authorized the execution and delivery of the Agreement by FAMS and have approved the transactions contemplated hereby.
Section 2.l6 Material Transactions or Affiliations. As of the Closing Date, there will exist no material contract agreement or arrangement between FAMS and any person who was at the time of such contract, agreement or arrangement an officer, director or person owning of record, or known by FAMS to own beneficially, ten percent (10%) or more of the issued and outstanding Common Shares of FAMS and which is to be performed in whole or in part after the date hereof. FAMS has no commitment, whether written or oral, to lend any funds to, borrow any money from or enter into any other material transactions with, any such affiliated person.
Section 2.17 Labor Relations. FAMS has never had a work stoppage resulting from labor problems.
Section 2.18 FAMS Schedules. Upon execution hereof, FAMS shall deliver to TIDALWAVE the following schedules, which are collectively agreed to as the "FAMS Schedules" which are dated the date of this Agreement, all certified by an officer of FAMS to be complete, true and accurate.
(a) complete and correct copies of the certificate of incorporation, bylaws and amendments thereto of FAMS as in effect as of the date of this Agreement;
(b) copies of financial statements of FAMS since incorporation of First American Mortgage Securities, Inc. on October 13, 1996.
* all written contracts of FAMS presently in effect * the description of any material adverse change in the business, operations, property, assets, or condition of FAMS since October 13, 1996, required to be provided pursuant to Section 2.6; * any other information, together with any required copies of documents, required to be disclosed in the FAMS schedules by Sections 2.1 through 2.17; and * income tax returns filed by First American Mortgage Securities, Inc. for each year since incorporation have previously been provided and are hereby included in the officer's certification required to be provided under this paragraph.
FAMS shall cause the FAMS Schedules and the instruments to be delivered to TIDALWAVE hereunder to be updated after the date hereof up to and including the Closing Date.
ARTICLE III EXCHANGE PROCEDURE AND OTHER CONSIDERATION
Section 3.1 Share Exchange/Delivery of FAMS Securities. On the Closing Date, the holders of FAMS Common Shares shall deliver to the escrow agent (i) certificates or other documents evidencing all of the issued and outstanding FAMS Common Shares, duly endorsed in blank or with executed stock power attached thereto in transferable form. Such shares shall be held by Richard I. Anslow and Associates in escrow, as security for the payments required hereunder and delivered to TIDALWAVE when the conditions of Section 3.2 have been fulfilled.
Section 3.2 Payment of Purchase Price. In exchange for all of the FAMS common Shares tendered pursuant to Section 3.1, TIDALWAVE shall cause to be delivered to FAMS a combination of Common and Preferred Shares equal; in value to $6,000,000.00.
TIDALWAVE shall tender a combination of its Common and Convertible Voting Preferred Stock to the shareholders of the Seller in the amount equal to the following formula.
Such shares shall be "restricted" in accordance with Rule 144 of the Securities Act of 1933 from the date of issuance.
Provided, that if any amount is not paid as scheduled, and such default continues for 15 days, then FAMS Shareholder shall have the option of terminating this Agreement by returning the portion of the purchase price received as of the termination date minus any amounts withdrawn or the value of any assets removed from FAMS by TIDALWAVE other than in the normal course of business to the end that FAMS and FAMS Shareholder shall be returned as nearly as possible to the financial condition existing on the date of closing.
Upon proof of such return payments the escrow agent(Richard I. Anslow & Associates) is authorized to return all of the FAMS shares to the FAMS Shareholder.
Section 3.2(a) Security. Provided, however, that until all of the above payments have been made in full the following conditions shall continue.
1) TIDALWAVE will make no withdrawal of cash or assets from First American Mortgage Securities, Inc. for any purpose whatever until all of the conditions of section 3.2 have been met.
2) TIDALWAVE will not give a security interest in or otherwise encumber any of the assets of First American Mortgage Securities, Inc. to any other person or entity.
Section 3.3 Other Consideration. FAMS shall receive the following additional consideration:
After closing, Mr. J.R. Stirling shall be President of the subsidiary company of TIDALWAVE ("Sub"); and shall be responsible for the day to day operations of Sub. Mr. Stirling shall sign an employment agreement with TIDALWAVE or Sub, as the case may be. Mr. Stirling shall receive a salary under the attached employment agreement, plus performance incentives attached to the employment agreement as Exhibit "A".
Following a majority vote by the stockholders of Tidalwave Holdings Inc., J.R. Stirling will be appointed to the Board of Directors of TIDALWAVE, as well as the ability to elect one (1) additional individual to the Board of Directors, of TIDALWAVE.
In addition, L. Edward Bache Sr. the sole shareholder of 1,450,000 FAMS non-voting preferred shares agrees that such non-voting preferred shares can not be converted into either FAMS or Tidalwave common or preferred shares after the execution of this agreement.
Section 3.4 Events Prior to Closing. Upon execution hereof or as soon thereafter as practical, management of FAMS and TIDALWAVE shall execute, acknowledge and deliver (or shall cause to be executed, acknowledged and delivered) any and all certificates, opinions, financial statements, schedules, agreements, resolutions rulings or other instruments required by this Agreement to be so delivered together with such other items as may be reasonably requested by the parties hereto and its respective legal counsel in order to effectuate or evidence the transactions contemplated hereby, subject only to the conditions to Closing referenced hereinbelow.
Section 3.5 Closing. The closing ("Closing") of the transactions contemplated by this Agreement shall be on or about October 27, 2000 ("Closing Date").
Section 3.6 Termination.
(a) This Agreement may be terminated by the board of directors or a majority interest of Shareholders of either TIDALWAVE or FAMS, respectively, at any time prior to the Closing Date if:
(i) there shall be any action or proceeding before any court or any governmental body which shall seek to restrain, prohibit or invalidate the transactions contemplated by this Agreement and which, in the judgment of such board of directors, made in good faith and based on the advice of its legal counsel makes it inadvisable to proceed with the exchange contemplated by this Agreement; or
(ii) any of the transactions contemplated hereby are disapproved by any regulatory authority whose approval is required to consummate such transactions.
(iii) Either party shall have the right to terminate this Agreement in the event that the other party is unable to tender performance on or before December 31, 2000.
In the event of termination pursuant to this paragraph (a) of this Section 3.6, no obligation, right or liability shall arise hereunder and each party shall bear all of the expenses incurred by it in connection with the negotiation, drafting and execution of this Agreement and the transactions herein contemplated;
(b) This Agreement may be terminated at any time prior to the Closing Date by action of the board of directors of TIDALWAVE if FAMS shall fail to comply in any material respect with any of its covenants or agreements contained in this Agreement or if any of the representations or warranties of FAMS contained herein shall be inaccurate in any material respect, which noncompliance or inaccuracy is not cured after 20 days written notice thereof is given to FAMS. If this Agreement is terminated pursuant to this paragraph (B) of the section 3.6, this Agreement shall be of no further force or effect and no obligation, right or liability shall arise hereunder.
Section 3.7 Post Closing Requirements of Subsidiary Company. Subsequent to closing of this transaction, the Subsidiary company (wholly-owned subsidiary of TIDALWAVE) shall undertake the following:
(i) provide all financial information to Leon Kline on a monthly basis; (ii) and provide Mr. Kline with duplicate monthly banking statements. FAMS and the current FAMS shareholders shall cooperate fully with TIDALWAVE regarding same.
ARTICLE IV
SPECIAL COVENANTS
Section 4.1 Access to Properties and Records. Prior to closing, FAMS and TIDALWAVE will each afford to the officers and authorized representatives of the other full access to the properties, books and records of FAMS and TIDALWAVE and as the case may be, in order that each may have full opportunity to make reasonable investigation as it shall desire to make of the affairs of the other and each will furnish the other with such additional financial and operating data and other information as to the business and properties of FAMS and TIDALWAVE as the case may be, as the other shall from time to time reasonably request.
Section 4.2 Availability of Rule 144. Each of the parties acknowledge that the stock of TIDALWAVE to be issued pursuant to this Agreement will be "restricted securities" as that term is defined in Rule 144 promulgated pursuant to the Securities Act. TIDALWAVE is under no obligation to register such shares under the Securities Act, or otherwise. The stockholders of TIDALWAVE holding restricted securities of TIDALWAVE as of the date of this Agreement and its respective heirs, administrators, personal representatives, successors and assigns, are intended third party beneficiaries of the provisions set forth herein. The covenants set forth in this Section 5.2 shall survive the Closing and the consummation of the transactions herein contemplated.
Section 4.3 Special Covenants and Representations Regarding the FAMS Common Shares to be Issued in the Exchange. The consummation of this Agreement, including the issuance of the TIDALWAVE Common Shares to the Shareholders of FAMS as contemplated hereby, constitutes the offer and sale of securities under the Securities Act, and applicable state statutes. Such transaction is represented by TIDALWAVE to be and shall be consummated in reliance on exemptions from the registration and prospectus delivery requirements of such statutes which depend, inter alia, upon the circumstances under which the FAMS Shareholders acquire such securities.
Section 4.4 Third Party Consents. FAMS and TIDALWAVE agree to cooperate with each other in order to obtain any required third party consents to this Agreement and the transactions herein contemplated.
Section 4.5 Actions Prior and Subsequent to Closing.
(a) From and after the date of this Agreement until the Closing Date and except as set forth in the FAMS Schedules or as permitted or contemplated by this Agreement, FAMS will use its best efforts to:
(i) carry on its business in substantially the same manner as it has heretobefore;
(ii) maintain and keep its properties in states of good repair and condition as at present, except for depreciation due to ordinary wear and tear and damage due to casualty;
(iii) maintain in full force and effect insurance comparable in amount and in scope of coverage to that now maintained by it;
(iv) perform in all material respects all of its obligations under material contracts, leases and instruments relating to or affecting its assets, properties and business;
(v) maintain and preserve its business organization intact, to retain its key employees and to maintain its relationship with its material suppliers and customers; and
(vi) fully comply with and perform in all material respects all obligations and duties imposed on its by all federal and state laws and all rules, regulations and orders imposed by federal or state governmental authorities.
(b) From and after the date of this Agreement until the Closing Date, FAMS will not, without the prior consent of TIDALWAVE:
(i) except as otherwise specifically set forth herein, make any change in its articles of incorporation or bylaws;
(ii) declare or pay any dividend on its outstanding Common Shares, except as may otherwise be required by law, or effect any stock split or otherwise change its capitalization, except as provided herein;
(iii) enter into or amend any employment, severance or agreements or arrangements with any directors or officers;
(v) grant, confer or award any option, warrants, conversion rights or other rights not existing on the date hereof to acquire any Common Shares; or
(vi) purchase or redeem any Common Shares.
(c) From and after the date of closing of this agreement and until FAMS shareholder has been released of any and all guaranties given by him on FAMS indebtedness, FAMS shareholder shall be granted a security interest in the assets of Sub which shall be filed and perfected of record in Florida.
Section 4.6 Indemnification.
(a) FAMS and its officer and directors including but not limited to J.R. Stirling and L. Edward Bache Sr., individually, hereby agree to indemnify TIDALWAVE and each of the officers, agents and directors of TIDALWAVE as of the date of execution of this Agreement including, but not limited to Leon Kline, against any loss, liability, claim, damage or expense (including, but not limited to, any and all expense whatsoever reasonably incurred in investigating, preparing or defending against any litigation, commenced or threatened or any claim whatsoever), to which it or they may become subject arising out of or based on any inaccuracy appearing in or misrepresentation made in this Agreement, including, but not limited to, misrepresentations. This indemnification provided for in this paragraph shall survive the Closing and consummation of the transactions contemplated hereby and termination of this Agreement; and
(b) TIDALWAVE and its officers and directors hereby agrees to indemnify FAMS and each of the officers, agents, directors and current shareholders of FAMS as of the Closing Date against any loss, liability, claim, damage or expense (including, but not limited to, any and all expense whatsoever reasonably incurred in investigating, preparing or defending against any litigation, commenced or threatened or any claim whatsoever), to which it or they may become subject arising out of or based on any inaccuracy appearing in or misrepresentation made in this Agreement and particularly the representation regarding no liabilities referred to in Section 3.4(b). The indemnification provided for in this Section shall survive the Closing and consummation of the transactions contemplated hereby and termination of this Agreement.
ARTICLE V
CONDITIONS PRECEDENT TO OBLIGATIONS OF TIDALWAVE
The obligations of TIDALWAVE under this Agreement are subject to the satisfaction, at or before the Closing Date, of the following conditions:
Section 5.1 Accuracy of Representations. The representations and warranties made by FAMS in this Agreement were true when made and shall be true at the Closing Date with the same force and effect as if such representations and warranties were made at the Closing Date (except for changes therein permitted by this Agreement), and FAMS shall have performed or complied with all covenants and conditions required by this Agreement to be performed or complied with by FAMS prior to or at the Closing. TIDALWAVE shall be furnished with a certificate, signed by a duly authorized officer of FAMS and dated the Closing Date, to the foregoing effect.
Section 5.2 Shareholder Approval. A majority of the Shareholders of FAMS shall have approved this Agreement and the transactions contemplated herein.
Section 5.3 Officer's Certificate. TIDALWAVE shall have been furnished with a certificate dated the Closing Date and signed by a duly authorized officer of FAMS to the effect that: (a) the representations and warranties of FAMS set forth in the Agreement and in all Exhibits, Schedules and other documents furnished in connection herewith are in all material respects true and correct as if made on the Effective Date; (b) FAMS has performed all covenants, satisfied all conditions, and complied with all other terms and provisions of this Agreement to be performed, satisfied or complied with by it as of the Effective Date; (c) since such date other than as previously disclosed to TIDALWAVE, FAMS has not entered into any material transaction other than transactions which are usual and in the ordinary course of its business; and (d) no litigation, proceeding, investigation or inquiry is pending or, to the best knowledge of FAMS, threatened, which might result in an action to enjoin or prevent the consummation of the transactions contemplated by this Agreement or, to the extent not disclosed in the FAMS Schedules, by or against FAMS which might result in any material adverse change in any of the assets, properties, business or operations of FAMS.
Section 5.4 No Material Adverse Change. Prior to the Closing Date, there shall not have occurred any material adverse change in the financial condition, business or operations of nor shall any event have occurred which, with the lapse of time or the giving of notice, may cause or create any material adverse change in the financial condition, business or operations of FAMS.
Section 5.5 Opinion of Majority Shareholders and Board of Directors of FAMS. TIDALWAVE shall receive an opinion dated the Closing date of October 27, 2000, from J.R Stirling and L. Edward Bache Sr. Majority Shareholders and Board of Directors of First American Mortgage Securities, Inc. in substantially the following form:
(a) First American Mortgage Securities, Inc. is a corporation duly organized, validly existing, and in good standing under the laws of Florida and has the corporate power and is duly authorized, qualified, franchised and licensed under all material applicable laws, regulations, ordinances and orders of public authorities to own all of its properties and assets and to conduct its business as now conducted, including qualification to do business as a foreign corporation in the states in which the character and location of the assets owned by it or the nature of the business transacted by it requires qualifications;
(b) To the best knowledge of such legal counsel, the execution and delivery by each corporation of this Agreement and the consummation of the transactions contemplated by this Agreement in accordance with the terms hereof will not conflict with or result in the breach of any term or provision of its respective certificates of incorporation or Bylaws or violate any court order, writ, injunction or decree applicable to either corporation, or its properties or assets;
(c) All issued and outstanding Share Certificates are legally issued, fully paid and nonassessable. Except as set forth in the FAMS Schedules, to the best knowledge of such legal counsel, there are no outstanding subscriptions, option, rights, warrants, convertible securities or other agreements or commitments obligating either corporation to issue any additional Share Certificates.
(d) This Agreement has been duly and validly authorized, executed and delivered by each corporation.
(e) To the best knowledge of such legal counsel, except as set forth in the FAMS Schedules, there are no actions, suits or proceedings pending or threatened by or against or affecting FAMS or its properties, at laws or in equity, before any court or other governmental agency or instrumentality, domestic or foreign or before any arbitrator of any kind;
(f) FAMS has taken all actions required by the applicable laws of Florida to permit the acquisition of the outstanding shares of FAMS into TIDALWAVE.
Section 5.6 Other Items. TIDALWAVE shall have received such further documents, certificates or instruments relating to the transactions contemplated hereby as TIDALWAVE may reasonably request.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF FAMS
The obligations of FAMS under this Agreement are subject to the satisfaction, at or before the Closing Date (unless otherwise indicated herein), of the following conditions:
Section 6.1 Accuracy of Representations. The representations and warranties made by TIDALWAVE in this Agreement were true when made and shall be true as of the Closing Date (except for changes therein permitted by this Agreement) with the same force and effect as if such representations and warranties were made at and as of the Closing Date, and TIDALWAVE shall have performed and complied with all covenants and conditions required by this Agreement to be performed or complied with by TIDALWAVE prior to or at the Closing. FAMS shall have been furnished with a certificate, signed by a duly authorized executive officer of TIDALWAVE and dated the Closing Date to the foregoing effect.
Section 6.2 Officer's Certificate. FAMS shall be furnished with a certificate dated the Closing Date and signed by a duly authorized officer of TIDALWAVE to the effect that: (a) the representations and warranties of TIDALWAVE set forth in the Agreement and in all Exhibits, Schedules and other documents furnished in connection herewith are in all material respects true and correct as if made on the Effective Date; and (b) TIDALWAVE had performed all covenants, satisfied all conditions, and complied with all other terms and provisions of the Agreement to be performed, satisfied or complied with by it as of the Effective Date.
Section 6.3 No Material Adverse Change. Prior to the Closing Date, there shall not have occurred any material adverse change in the financial condition, business or operations or nor shall any event have occurred which, the lapse of time or the giving of notice, may cause or create any material adverse change in the financial condition, business or operations of TIDALWAVE.
Section 6.4 Opinion of Counsel to TIDALWAVE. FAMS shall receive an opinion dated the Closing Date of Richard I. Anslow & Associates, counsel to TIDALWAVE, in substantially the following form:
(a) TIDALWAVE is a corporation duly organized, validly existing, and in good standing under the laws of the state of Florida and has the corporate power and is duly authorized, qualified, franchised, and licensed under all applicable laws, regulations, ordinances and order of public authorities to own all of its properties and assets and to carry on its business in all material respects as it is now being conducted, including qualification to do business as a foreign corporation in the states in which the character and location of the assets owned by it or the nature of the business transacted by it requires qualification;
(b) To the best knowledge of such legal counsel, the execution and delivery by TIDALWAVE of this Agreement and the consummation of the transactions contemplated by this Agreement in accordance with the terms hereof will not conflict with or result in the breach of any term or provision of TIDALWAVE'S articles of incorporation or bylaws or constitute a default or give rise to a right of termination, cancellation or acceleration under any material FAMS, indenture, deed of trust, license agreement or other obligation or violate any court order, writ, injunction or decree applicable to TIDALWAVE or its properties or assets;
(c) The authorized capitalization of Tidalwave consists of 100,000,000 shares of Common Stock, par value $0.001 per share. All issued and outstanding shares are legally issued, fully paid and nonassessable and issued in violation of the preemptive rights of any person;
(d) The TIDALWAVE Common Shares to be issued to the FAMS Shareholders pursuant to the terms of this Agreement will be, when issued in accordance with the terms hereof, legally issued, fully paid and non-assessable;
(e) This Agreement has been duly and validly authorized, executed and delivered and constitutes the legal and binding obligation of TIDALWAVE, except as limited by bankruptcy and insolvency laws and by other laws affecting the rights of creditors generally;
(f) To the best knowledge of such counsel, there are no actions, suits or proceedings pending or threatened by or against TIDALWAVE or affecting TIDALWAVE'S properties, at law or in equity, before any court or other governmental agency or instrumentality, domestic or foreign or before any arbitrator of any kind;
(g) TIDALWAVE has taken all actions required by the applicable laws of the state of Florida to permit the issuance of the TIDALWAVE Common Shares to the FAMS Shareholder;
(h) all shares given in payment to FAMS hereunder were validly issued in compliance with all state and federal securities laws.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Brokers and Finders. Each party hereto hereby represents and warrants that it is under no obligation, express or implied, to pay certain finders in connection with the bringing of the parties together in the negotiation, execution or consummation of this Agreement. The parties each agree to indemnify the other against any claim by any third person not listed in Schedule 8.1 for any commission, brokerage or finder's fee or other payment with respect to this Agreement or the transactions contemplated hereby based on any alleged agreement or understanding between the indemnifying party and such third person, whether express or implied from the actions of the indemnifying party.
Section 7.2 Law, Forum and Jurisdiction. This Agreement shall be construed and interpreted in accordance with the laws of the State of Florida, United States of America.
Section 7.3 Notices. Any notices or other communications required or permitted hereunder shall be sufficiently given if personally delivered to it or sent by registered mail or certified mail, postage prepaid, or by prepaid telegram addressed as follows:
If to TIDALWAVE: Richard I. Anslow & Associates 4400 Route 9, South, 2nd Floor Freehold, New Jersey 07728
If to FAMS: Charles Brown, Attorney 7 Fountain Square Belleair, Florida 34616
or such other addresses as shall be furnished in writing by any party, in the manner for giving notices hereunder, and any such notice or communication shall be deemed to have been given as of the date so delivered, mailed or telegraphed.
Section 7.4 Attorneys' Fees. In the event that any part institutes any action or suit to enforce this Agreement or to secure relief from any default hereunder or breach hereof, the breaching party or parties shall reimburse the non-breaching party or parties for all costs, including reasonable attorneys' fees, incurred in connection therewith and in enforcing or collecting any judgment rendered therein.
Section 7.5 Confidentiality. Each party hereto agrees with the other parties that, unless and until the reorganization contemplated by this Agreement has been consummated, they and its representatives will hold in strict confidence all data and information obtained with respect to the other party or any subsidiary thereof from any representative, officer, director or employee, or from any books or records or from personal inspection, of such other party, and shall not use such date or information or disclosure the same to others, except: (i) to the extent such data is a matter of public knowledge or is required by law to be published; and (ii) to the extent that such data or information must be used or disclosed in order to consummate the transactions contemplated by this Agreement.
Section 7.6 Schedules; Knowledge. Each party is presumed to have full knowledge of all information set forth in the other party's schedules delivered pursuant to this Agreement.
Section 7.7 Third Party Beneficiaries. This contract is solely among, FAMS, FAMS Shareholders and TIDALWAVE and except as specifically provided, no director, officer, stockholder, employee, agent, independent contractor or any other person or entity shall be deemed to be a third party beneficiary of this Agreement.
Section 7.8 Entire Agreement. This Agreement represents the entire agreement between the parties relating to the subject matter hereof. This Agreement alone fully and completely expresses the agreement of the parties relating to the subject matter hereof. There are no other courses of dealing, understanding, agreements, representations or warranties, written or oral, except as set forth herein. This Agreement may not be amended or modified, except by a written agreement signed by all parties hereto.
Section 7.9 Survival; Termination. The representations, warranties and covenants of the respective parties shall survive the Closing Date and the consummation of the transactions herein contemplated for 18 months.
Section 7.10 Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original and all of which taken together shall be but a single instrument.
Section 7.11 Amendment or Waiver. Every right and remedy provided herein shall be cumulative with every other right and remedy, whether conferred herein, at law, or in equity, and may be enforced concurrently herewith, and no waiver by any party of the performance of any obligation by the other shall be construed as a waiver of the same or any other default then, theretofore, or thereafter occurring or existing. At any time prior to the Closing Date, this Agreement may be amended by a writing signed by all parties hereto, with respect to any of the terms contained herein, and any term or condition of this Agreement may be waived or the time for performance hereof may be extended by a writing signed by the party or parties for whose benefit the provision is intended.
Section 7.12 Incorporation of Recitals. All of the recitals hereof are incorporated by this reference and are made a part hereof as though set forth at length herein.
Section 7.13 Expenses. Each party herein shall bear all of its respective costs and expenses incurred in connection with the negotiation of this Agreement and in the consummation of the transactions provided for herein and the preparation thereof.
Section 7.14 Headings; Context. The headings of the sections and paragraphs contained in this Agreement are for convenience of reference only and do not form a part hereof and in no way modify, interpret or construe the meaning of this Agreement.
Section 7.15 Benefit. This Agreement shall be binding upon and shall insure only to the benefit of the parties hereto, and its permitted assigns hereunder. This Agreement shall not be assigned by any party without the prior written consent of the other party.
Section 7.16 Public Announcements. The parties will consult regarding the text of any public announcement of the acquisition.
Section 7.17 Severability. In the event that any particular provision or provisions of this Agreement or the other agreements contained herein shall for any reason hereafter be determined to be unenforceable, or in violation of any law, governmental order or regulation, such unenforceability or violation shall not affect the remaining provisions of such agreements, which shall continue in full force and effect and be binding upon the respective parties hereto.
Section 7.18 Failure of Conditions; Termination. In the event of any of the conditions specified in this Agreement shall not be fulfilled on or before the Closing Date, either of the parties have the right either to proceed or, upon prompt written notice to the other, to terminate and rescind this Agreement without liability to any other party. The election to proceed shall not affect the right of such electing party reasonably to require the other party to continue to use its efforts to fulfill the unmet conditions.
Section 7.19 No Strict Construction. The language of this Agreement shall be construed as a whole, according to its fair meaning and intendment, and not strictly for or against either party hereto, regardless of who drafted or was principally responsible for drafting the Agreement or terms or conditions hereof.
Section 7.20 Execution Knowing and Voluntary. In executing this Agreement, the parties severally acknowledge and represent that each: (a) has fully and carefully read and considered this Agreement; (b) has been or has had the opportunity to be fully apprised by its attorneys of the legal effect and meaning of this document and all terms and conditions hereof; and (c) is executing this Agreement voluntarily, free from any influence, coercion or duress of any kind.
IN WITNESS WHEREOF, the corporate parties hereto have caused this Agreement to be executed by its respective officers, hereunto duly authorized, and entered into as of the date first above written.
