EXHIBIT 10.2

STOCK EXCHANGE AGREEMENT

This Stock Exchange Agreement (this “Agreement”) is made as of March 8, 2005,
among Kevin M. Gagne (“KMG”) and the Gagne First Revocable Trust (the “Trust”
and together with KMG hereinafter collectively “Gagne”) and Empire Financial
Holding Company, a Florida corporation (the “Company”).

WHEREAS, KMG is the grantor and a trustee of the Trust;

WHEREAS, the Company is authorized to issue 100,000,000 shares of common stock,
par value $.01 per share (“Common Stock”), and 1,000,000 shares of preferred
stock, par value $.01 per share (“Preferred Stock”);

WHEREAS, the Company has designated 10,000 shares of its Preferred Stock as
Series A Preferred Stock (“A Preferred Stock”), 7,000 shares of its Preferred
Stock as Series B Convertible Preferred Stock (“B Preferred Stock”) and 8,000
shares of its Preferred Stock as Series C Convertible Preferred Stock (“C
Preferred Stock”) having the terms as are set forth on Exhibit A hereto;

WHEREAS, the Company currently has issued and outstanding approximately
3,542,525 shares of Common Stock and also 10,000 shares of A Preferred Stock,
which are all owned by the Trust (“Gagne A Stock”);

WHEREAS, the Company has issued to the Trust a promissory note made by the
Company, payable to the Trust, dated November 6, 2003 in the original principal
amount of $500,000 (the “November 03 Note”); and

WHEREAS, Gagne and the Company desire that the Trust exchange the Gagne A Stock
and the November 03 Note for 8,000 shares of C Preferred Stock to be issued by
the Company to the Trust; all upon the terms and conditions set forth in this
Agreement;

 

 

Company:________

Gagne:________

 

--------------------------------------------------------------------------------

 

 

NOW, THEREFORE, in consideration of the premises and the covenants and
agreements herein contained, the parties hereto agree as follows:

1.

Exchange of Gagne A Stock and November 03 Note for C Preferred Stock.

At the Closing (as defined below), Gagne and the Company agree to exchange the
Gagne A Stock and the November 03 Note for the C Preferred Stock. Such exchange
will be accomplished by (a) the Trust (i) transferring and delivering to the
Company a certificate or certificates, as the case may be, representing the
Gagne A Stock (with appropriate executed stock powers) and (ii) delivering to
the Company for cancellation the November 03 Note and (b) the Company issuing
and delivering to the Trust a certificate or certificates, as the case may be,
representing 8,000 shares of C Preferred Stock registered in the name of the
Trust. Notwithstanding the foregoing, to the extent that Gagne receives from the
Company any Additional Payments (as defined in Section 5.6) then the number of
shares of C Preferred Stock shall be reduced by a number equal to the aggregate
amount of such Additional Payments divided by 100 (rounded to the nearest whole
share of C Preferred Stock). All certificates representing shares of C Preferred
Stock and shares of Common Stock deliverable upon conversion of the C Preferred
Stock shall bear the following legend:

THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT
PURPOSES ONLY AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNTIL
(I) A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“ACT”), SHALL HAVE BECOME EFFECTIVE WITH RESPECT THERETO OR (II) RECEIPT BY THE
COMPANY OF AN

 

2

 

Company:________

Gagne:________

 

 

--------------------------------------------------------------------------------

 

 

OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY TO THE EFFECT THAT
REGISTRATION UNDER THE ACT OR ANY APPLICABLE STATE SECURITIES LAW IS NOT
REQUIRED IN CONNECTION WITH SUCH PROPOSED TRANSFER.               

2.

Closing and Escrow

2.1        Closing. The closing of the transactions contemplated hereby (the
“Closing”) shall take place at the offices of Morse, Zelnick, Rose & Lander,
LLP, 405 Park Avenue, New York, New York 10022 at 10:00 A.M. simultaneously with
the closing of the transactions contemplated by a Stock Purchase Agreement dated
the date hereof, by and between the Company and EFH Partners, LLC (the “Stock
Purchase Agreement”), or at such other place, date or time as shall be mutually
agreed on by the Company and Gagne (such time and such date or such other agreed
upon time and date is called the “Closing Date”).

2.2.       Escrow. The stock certificates representing the Gagne A Stock and the
November 03 Note (a) shall simultaneously with the execution of this Agreement
be delivered to Greenberg Traurig, LLP, 13155 Noel Road, Suite 600, Dallas,
Texas 75240, and (b) shall be held by Greenberg Traurig, LLP pursuant to the
terms of that certain escrow agreement, dated of even date herewith, among
Gagne, the Company, EFH Partners, LLC and Greenberg Traurig, LLP (the “Escrow
Agreement”).

3.         Representations and Warranties of the Company. The Company hereby
represents and warrants to Gagne, that:

3.1        Authority and Compliance. The Company has full power and authority to
execute and deliver this Agreement and the Escrow Agreement. The Company has
taken all

 

3

 

Company:________

Gagne:________

 

 

--------------------------------------------------------------------------------

 

 

corporate actions, which are necessary to authorize the execution, delivery and
performance of this Agreement and the Escrow Agreement, the issuance of the C
Preferred Stock, and the consummation of the transactions contemplated hereby
and thereby. This Agreement and the Escrow Agreement have been duly and validly
executed and delivered on behalf of the Company and constitute a valid
obligation of the Company, enforceable against the Company in accordance with
their respective terms, except to the extent that such enforceability may be
limited by applicable insolvency, bankruptcy, reorganization, arrangement or
moratorium laws or similar laws affecting the enforcement of creditors’ rights
generally and by general equity principles (whether asserted in an action at law
or in equity).

3.2        No Breach; No Default. Neither the execution, delivery or performance
of this Agreement or the Escrow Agreement, nor the consummation of the
transactions contemplated hereby and thereby by the Company, (a) conflicts with
or results in any breach of, (b) constitutes a default under, (c) results in a
violation of, or (d) gives any third party any right to accelerate any
obligation under, any contract to which the Company is a party or by which any
of its assets are bound, nor conflicts with or violates any provision of the
Company’s Certificate of Incorporation or Bylaws.

3.3        Filings, Consents and Approvals. The Company is not required to
obtain any consent, waiver, authorization or order of, give any notice to, or
make any filing or registration with, any court or other federal, state, local
or other governmental authority or any corporation, company, partnership, joint
venture, other entity or natural person (collectively, a “Person”) in connection
with the execution, delivery and performance by the Company of the transactions
contemplated by this Agreement or the Escrow Agreement.

 

4

 

Company:________

Gagne:________

 

 

--------------------------------------------------------------------------------

 

 

3.4        Capitalization of the Company. The total authorized capital stock of
the Company consists of 100,000,000 shares of Common Stock and 1,000,000 shares
of Preferred Stock, of which approximately 3,542,525 shares of Common Stock and
10,000 shares of A Preferred Stock are currently issued and outstanding.

3.5        Options, Etc. Except as set forth in Schedule 3.5, the Company does
not have outstanding any

(a) options, warrants or other rights to purchase, acquire or convert into any
shares of its capital stock or other equity securities, or

(b) any other agreement or right (preemptive, contractual or otherwise) to issue
or sell any such shares of its capital stock or other equity securities.

3.6        No Restrictions on Securities. Except as may be set forth on the
Exhibits to the SEC Reports (as defined below) the Company is not a party to any
agreement relating to the voting of shares of its capital stock on any matter.

3.7        SEC Filings. The Company has filed all reports required to be filed
by it under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), since January 1, 2003 (the foregoing being collectively referred to
herein as the “SEC Reports”). As of their respective dates, the SEC Reports
complied in all material respects with the requirements of the Exchange Act and
the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”)
promulgated thereunder, and none of the SEC Reports, when filed, contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading, except as
such SEC Reports may have been modified or amended by

 

5

 

Company:________

Gagne:________

 

 

--------------------------------------------------------------------------------

 

 

the subsequent filing of any SEC Report and except for the possible effect of
any Mutual Fund Proceeding (as hereinafter defined). The financial statements
included in the SEC Reports comply in all material respects with applicable
accounting requirements and the rules and regulations of the SEC with respect
thereto as in effect at the time of filing, except as such financial statements
may have been modified or amended by the subsequent filling of any SEC Report
and except for the possible effect of any Mutual Fund Proceeding. Such financial
statements have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis during the periods involved, except as
may be otherwise specified in such financial statements or the notes thereto,
and fairly present in all material respects the financial position of the
Company and its consolidated subsidiaries as of and for the dates thereof and
the results of operations for the periods then ended, subject, in the case of
unaudited statements, to normal year-end audit adjustments, except as such
financial statements may have been modified or amended by the subsequent filling
of any SEC Report and except for the possible effect of any Mutual Fund
Proceeding. As used in this Agreement, “Mutual Fund Proceeding” shall mean any
action, suit, proceeding, arbitration or alternative dispute resolution
mechanism, or any hearing, inquiry or investigation related to the trading of
mutual fund shares by Empire Financial Group, Inc., a wholly owned subsidiary of
the Company (“EFG”) on behalf of its customers that has been or may be commenced
in the future by the SEC, the Attorney General of the State of New York or any
other government or regulatory agency or authority.

3.8        C Preferred Stock. The C Preferred Stock to be issued to the Trust as
contemplated by this Agreement will upon delivery to the Trust be duly
authorized, validly issued, fully paid and non-assessable. The Company has
reserved from its duly authorized (but

 

6

 

Company:________

Gagne:________

 

 

--------------------------------------------------------------------------------

 

 

unissued) Common Stock 400,000 shares of its Common Stock for issuance upon
conversion of the C Preferred Stock.

3.9        Legal Proceedings; Customer Complaints. Except as described in the
SEC Reports, there are no claims, actions, suits, proceedings, arbitrations or
investigations, either administrative or judicial, pending or, to the Company’s
actual knowledge, threatened by, or against, the Company or any of its
subsidiaries that are required to be disclosed in the SEC Reports or that
specifically relating to the transactions contemplated by this Agreement, at law
or in equity or otherwise, before or by any court or governmental agency or
body, domestic or foreign, or before an arbitrator of any kind. The Company has
previously delivered to Gagne a true and correct list of all written complaints
received by the Company or any of its subsidiaries from its customers with
regard to the brokerage business of EFG since January 1, 2003 and the current
status of disposition of such complaints.

3.10      Certain Correspondence. The Company has previously delivered to Gagne
a true and correct copy of (a) the notice, dated July 22, 2004, received from
the AMEX regarding the failure of the Company to meet the net worth requirement
for continued listing and granting the Company until November 12, 2005 to comply
with such minimum net worth requirement and (b) a letter dated May 24, 2004,
from the SEC to EFG, advising EFG that the staff of the SEC intends to recommend
that the SEC commence civil injunctive action and public administrative
proceedings against EFG and certain of its former employees in connection with
the trading of mutual fund shares on behalf of certain of EFG’s customers
(collectively, the “Correspondence”). Neither the Company nor EFG has received
any subsequent correspondence

 

7

 

Company:________

Gagne:________

 

 

--------------------------------------------------------------------------------

 

 

or other communication from the AMEX or SEC, as the case may be, that materially
alters or modifies the matters described in the Correspondence.

3.11      NASD. The Company has previously provided to Gagne a true and correct
copy of the membership agreement between EFG and the National Association of
Securities Dealers (the “NASD”). The Company has previously provided to Gagne
true and correct copies of all exit letters and other material written
correspondence received by EFG from the NASD since January 1, 2003.

 

8

 

Company:________

Gagne:________

 

 

--------------------------------------------------------------------------------

 

 

 

4.

Representations and Warrants of Gagne to the Company.

4.1        Authority and Compliance. Gagne has full power and authority to
execute and deliver this Agreement and the Escrow Agreement. This Agreement and
the Escrow Agreement has been duly and validly executed and delivered by Gagne
and constitutes a valid obligation of Gagne, enforceable against Gagne in
accordance with their respective terms, except to the extent that such
enforceability may be limited by applicable insolvency, bankruptcy,
reorganization, arrangement or moratorium laws or similar laws affecting the
enforcement of creditors’ rights generally and by general equity principles
(whether asserted in an action at law or in equity). No consent, authorization
or approval of, exemption by, or filing with, any domestic governmental or
administrative authority, or any court, is required to be obtained or made by
Gagne in connection with the execution, delivery and performance of this
Agreement or the Escrow Agreement by Gagne or the consummation of the
transactions contemplated hereby or thereby. However, the approval of the
National Association of Securities Dealers, Inc. may be required to be obtained
by the Company in connection herewith.

4.2        No Conflict. The performance of this Agreement or the Escrow
Agreement by Gagne and the consummation of the transactions contemplated hereby
and thereby will not result in a breach or violation of any of the terms or
provisions of, or constitute a default under, (i) the instrument creating the
Trust, (ii) any contract or other agreement or instrument to which Gagne is a
party, or (iii) any law, order, rule, regulation, writ, injunction or decree
applicable to Gagne.

4.3        Ownership. Gagne is the registered and beneficial owner of the Gagne
A Stock.

 

9

 

Company:________

Gagne:________

 

 

--------------------------------------------------------------------------------

 

 

4.4        No Liens. The Gagne A Stock is owned by Gagne free and clear of all
liens, charges, encumbrances and restrictions of any kind and nature whatsoever
and none of such shares is subject to any agreement whatsoever with respect to
the voting, sale, option or pledge thereof or any like matter nor has any proxy
been granted to any Person with respect to any such Gagne A Stock.

4.5        Purchase for Own Account. Gagne is acquiring the C Preferred Stock
for investment for Gagne’s own account, not as a nominee or agent, and not with
a view to, or for the resale in connection with, any distribution thereof. Gagne
understands that the C Preferred Stock has not been, and will not be, registered
under the Securities Act of 1933, as amended (the “Securities Act”), by reason
of a specific exemption from the registration provisions of the Securities Act,
the availability of which depends upon, among other things, the bona fide nature
of the investment intent and the accuracy of Gagne’s representations as
expressed herein.

4.6        Restricted Securities. Gagne understands that the C Preferred Stock
and any Common Stock received upon conversion of the C Preferred Stock is
characterized as “restricted securities” under the Securities Act inasmuch as
they are being acquired from the Company in a transaction not involving a public
offering and that under the Securities Act and applicable regulations
thereunder. Such C Preferred Stock and any Common Stock received upon conversion
of the C Preferred Stock may be resold without registration under the Securities
Act only in certain limited circumstances. In this connection, Gagne represents
that he is familiar with Rule 144 promulgated under the Securities Act, as
presently in effect, and understands the resale limitations imposed thereby and
by the Securities Act.

 

10

 

Company:________

Gagne:________

 

 

--------------------------------------------------------------------------------

 

 

4.7        Accredited Investor Status. Gagne is an “accredited investor” within
the meaning of Rule 501 of Regulation D promulgated under the Securities Act (an
“Accredited Investor”).

5.

Covenants.

5.1        SEC Settlement.       Gagne hereby covenants and agrees with the
Company that if the amount paid by EFG to the SEC in connection with the
settlement of any of the matters set forth in a letter dated May 24, 2004, from
Jon B. Jordon to Glenn A. Harris (the “Wells Letter”) pursuant to which EFG was
advised that the staff of the Securities and Exchange Commission intends to
recommend that the SEC bring civil injunctive action and institute public
administrative proceedings against EFG and certain individuals, exceeds
$200,000, Gagne will pay to the Company as a contribution towards the amount of
the disgorgement of profits which EFG is required to pay in connection with such
settlement an amount equal to 50% of such excess amount, but not to exceed an
aggregate payment from Gagne to the Company in the amount of $250,000. Such
amount shall be paid by Gagne delivering to the Company a check payable to the
order of the Company on the later of (a) five business days after the effective
date of such settlement or (b) the Closing Date. Gagne acknowledges and agrees
that the Company shall have the right to offset any amount that the Company owes
Gagne pursuant to the terms of Section 5.2 to satisfy the obligation of Gagne to
the Company as set forth in this Section and the Company agrees to so offset any
such amount by the amount, if any, that remains unpaid to Gagne pursuant to the
provision of Section 5.2.

5.2       Gagne Payment. The Company agrees to pay Gagne $150,000 by check
payable to the order of Gagne on the earlier of (a) June 30, 2007, (b) ten
business days after the

 

11

 

Company:________

Gagne:________

 

 

--------------------------------------------------------------------------------

 

 

effective date of the settlement by EFG with the SEC of any of the matters set
forth in the Wells Letter or (c) ten business days after the following have
occurred (i) the SEC has notified EFG orally or in writing that the staff of the
SEC no longer intends to recommend that the SEC commence civil injunctive action
or public administrative proceedings against the Company in connection with the
trading of mutual fund shares, (ii) if such notice was made orally to EFG, EFG
has confirmed such oral notice in writing to the staff of the SEC and the staff
has not objected to EFG’s written notice to the staff of the SEC, and (iii) the
Company has issued a press release or other public filing to the effect that the
staff of the SEC no longer intends to recommend that the SEC commence civil
injunctive action or public administrative proceedings against EFG in connection
with the trading of mutual fund shares.

5.3.       Severance Payments; Indemnification.     The Company and Gagne agree
that, effective February 28, 2005, the Company shall have no further obligations
(i) to make any severance payments (“Gagne Severance Payments”) to Gagne
pursuant to Section 3 of that certain Severance Agreement, dated June 25, 2004,
between the Company and Gagne (the “Severance Agreement”), (ii) to register any
shares of Common Stock owned by Gagne pursuant to Section 7 of the Severance
Agreement or (iii) to make any payments pursuant to the November 03 Note. Gagne
acknowledges that the Company (a) has fully performed all of its monetary
obligations under, and not violated the terms of, the Severance Agreement and
the November 03 Note through February 28, 2005 and (b) has no other monetary
obligations or liabilities to Gagne, pursuant to any contract, arrangement,
agreement or otherwise, that are due and payable and have not been fully
performed and satisfied through the date of this Agreement; except that the
Company will continue to be obligated (i) to pay to Gagne the Gagne Severance

 

12

 

Company:________

Gagne:________

 

 

--------------------------------------------------------------------------------

 

 

Payments due February 1, 2005 and the payment due February 1, 2005 pursuant to
the November 03 Note in the aggregate amount of $26,197.92 (the “February 05
Payment”), and (ii) under the terms of a Note payable to the individual
retirement account for the benefit of Gagne in the principal amount of $38,000.
In addition, notwithstanding anything to the contrary contained in the Severance
Agreement or any other agreement between the Company, EFG and Gagne, neither the
Company nor EFG shall have any obligation to indemnify or hold harmless Gagne in
connection with any Proceeding (as defined in the Severance Agreement) related
to the trading of mutual fund shares by EFG on behalf of its customers that has
been commenced or may be commenced in the future by the SEC, the Attorney
General of the State of New York or any other government or regulatory agency or
authority against Gagne or to reimburse Gagne for any Expenses (as defined in
the Severance Agreement) that have been incurred or may be incurred in the
future by or on behalf of Gagne relating to any such Proceeding.

5.4.       Piggy Back Registration Rights.    If the Company at any time prior
to December 31, 2008, proposes to file a registration statement to register any
of its securities under the Securities Act (except for a registration filed on
Forms S-4 or S-8) for sale for its own account, it will at each such time give
prompt written notice to Gagne of its intention to do so. Upon the written
request of Gagne, which request shall specify the amount of shares of Common
Stock (the “Registrable Shares”) Gagne wants included in any such registration
statement, made as promptly as practicable and in any event within fifteen days
after the receipt of notice from the Company, the Company will use its
commercially reasonable efforts to effect the registration under the Securities
Act of all the Registrable Shares which it has been so requested to register by
Gagne; provided however that the total aggregate number of shares of Common
Stock which

 

13

 

Company:________

Gagne:________

 

 

--------------------------------------------------------------------------------

 

 

Gagne may include in all such registration statements may not exceed 200,000.
However, if the managing underwriter of any underwritten offering in its sole
discretion determines that the total amount of Registrable Shares requested to
be included in such registration would jeopardize the success of the offering by
the Company, then the Company shall include in such registration, only the
number which it is so advised can be sold in (or during the time of) such
offering. In such event the Company shall include the Registrable Shares in such
registration, provided that Gagne (i) agrees to sell the Registrable Shares on
the basis provided in any underwriting agreements relating to such offering,
(ii) completes and executes all reasonable and customary questionnaires, powers
of attorney, indemnities, underwriting agreements, lock-up agreements and other
documents required under the terms of such underwriting arrangements, and (iii)
agrees to pay Gagne’s pro rata portion of all underwriting discounts and
commissions. Upon the sale of any Registrable Shares pursuant to any such
registration statement Gagne agrees that Gagne shall convert such number of
shares of C Preferred Stock owned by him as shall result in Gagne receiving upon
such conversion that number of shares of Common Stock as shall equal the number
of Registrable Shares so sold.

5.5        Additional Gagne Loan and February 05 Payment. On the Closing Date,
the Company shall repay in full all interest and principal owed by (i) the
Company to Gagne, pursuant to the terms of that certain promissory note, dated
February 7, 2005, in the original principal amount of $100,000 and Gagne shall
deliver for cancellation the original of such note to the Company at the Closing
and (ii) the Company shall pay to Gagne the February 05 Payment.

 

14

 

Company:________

Gagne:________

 

 

--------------------------------------------------------------------------------

 

 

5.6        Additional Gagne Payments. Gagne may at his sole option advise the
Company in writing at any time prior to the Closing that he has elected to be
paid all payments that were due and payable to Gagne under Section 7 of the
Severance Agreement and the November 03 Note at any time after February 1, 2005
through the day prior to the Closing Date (the “Additional Payments”). All such
Additional Payments, if any, shall be paid to Gagne on the Closing Date.

6.         Conditions Precedent to the Obligations of the Company. The
obligations of the Company pursuant to this Agreement are subject to the
satisfaction at the Closing of each of the following conditions; provided,
however, that the Company may, in its sole discretion, waive any of such
conditions and proceed with the transactions contemplated hereby.

6.1        Accuracy of Representations and Warranties. The representations and
warranties of Gagne contained in this Agreement shall be true and correct in all
material respects on and as of the Closing Date, as if made on and as of the
Closing Date.

6.2        Performance of Agreements. Gagne shall have performed and complied in
all material respects with all covenants, obligations and agreements to be
performed or complied with by it on or before the Closing Date pursuant to this
Agreement.

6.3        Other Transactions. The transactions contemplated by (i) the Stock
Purchase Agreement and (ii) a Stock Purchase and Option Agreement dated the date
hereof, by and between Gagne and the Purchaser (collectively, the “Other
Transactions”) shall have been consummated.

6.4         Order. No statute, rule, regulation, executive order, decree or
injunction shall have been enacted, entered, promulgated or enforced by any
court or governmental

 

15

 

Company:________

Gagne:________

 

 

--------------------------------------------------------------------------------

 

 

authority against the Company and be in effect that prohibits or restricts the
consummation of the transactions contemplated by this Agreement or makes such
consummation illegal (with the Company agreeing to use its
commercially reasonable efforts to have any such prohibition lifted).

7.         Conditions Precedent to the Obligations of Gagne. The obligations of
Gagne under this Agreement are subject to the satisfaction at the Closing of
each of the following conditions; provided, however, that Gagne may, in his sole
discretion, waive any of such conditions and proceed with the transactions
contemplated hereby.

7.1        Accuracy of Representations and Warranties. The representations and
warranties of the Company contained in this Agreement shall be true and correct
in all material respects on and as of the Closing Date, as if made on and as of
the Closing Date.

7.2        Performance of Agreements. The Company shall have performed and
complied in all material respects with all covenants, obligations and agreements
to be performed or complied with by them on or before the Closing Date pursuant
to this Agreement.

7.3        Other Transactions. The Other Transactions shall have been
consummated.

7.4       Order. No statute, rule, regulation, executive order, decree or
injunction shall have been enacted, entered, promulgated or enforced by any
court or governmental authority against Gagne and be in effect that prohibits or
restricts the consummation of the transactions contemplated by this Agreement or
makes such consummation illegal (with Gagne agreeing to use its
commercially reasonable efforts to have any such prohibition lifted).

 

16

 

Company:________

Gagne:________

 

 

--------------------------------------------------------------------------------

 

 

8.         Termination. If the Closing has not occurred within 120 days from the
date hereof, either party may, in its sole discretion, terminate this Agreement
by advising the other party in writing of its election to do so, in which event
this Agreement shall immediately terminate; provided that the right to terminate
this Agreement under this Section shall not be available to any party whose
failure to fulfill any agreement or obligation under this Agreement has been the
cause of or resulted in the failure of the Closing to occur on or before such
date; and further provided that any such termination shall not relieve any party
from any liability that such party may have on account of the breach by such
party, prior to such termination, of any covenant or agreement made by such
party herein. Upon any such termination the covenants and agreements set forth
in Section 5.1, 5.2, 5.3 and 5.4 hereof shall be void ab initio and shall be
deemed to be of no force and effect; provided however that the failure of the
Company to have made any payment to Gagne pursuant to the Severance Agreement or
the November 03 Note shall not be deemed to be a default under the Severance
Agreement or the November 03 Note, respectively; and the Company shall be
obligated to make any payments that were otherwise due and payable thereunder
prior to such termination on or before the 10th day following such termination.

9.

General Provisions.

9.1        Survival of Representations, Warranties, Covenants, and Agreements.
The representations and warranties contained in this Agreement shall survive
until June 30, 2006 and any covenants and agreements contained herein shall
survive the Closing for the periods indicated therein and if no period is
indicated shall survive indefinitely. Notwithstanding the

 

17

 

Company:________

Gagne:________

 

 

--------------------------------------------------------------------------------

 

 

foregoing, the representations and warranties set forth in Sections 3.1, 4.1,
4.3, 4.4 and 4.5 shall survive the Closing indefinitely.

9.2        Expenses. Each of the parties to this Agreement shall pay its own
fees and expenses incurred in connection with the negotiation, preparation and
execution of this Agreement and the related agreements and documents referred to
herein, and the consummation of all transactions contemplated by this Agreement,
including all attorneys’, accountants’ and financing fees.

9.3        Notices. Any notices required or permitted to be given under this
Agreement shall be given in writing to each other party and shall be deemed
received by a party (a) when personally delivered to such party at its address
as set forth below or (b) if sent by overnight courier, next day delivery, on
the next business day following the date when given to the overnight courier
service, addressed to such party as indicated below:

 

If to the Company:

Empire Financial Holding Company

 

 

2170 West State Road 434, Suite 100

 

Longwood, Florida

32779

 

Attention: President

 

 

18

 

Company:________

Gagne:________

 

 

--------------------------------------------------------------------------------

 

 

 

With a copy to:

Greenberg Traurig, LLP

13155 Noel Road, Suite 600

Dallas, Texas 75240

Attention: Phillip J. Kushner

 

If to Gagne:

Kevin M. Gagne

1911 Lake Markham Preserve Trail

Sanford, Florida 32771

 

With a copy to:

Goldstein & DiGioia LLP

45 Broadway – 11th Floor

New York, New York 10006

Attention: Stanley R. Goldstein

 

9.4        Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.

9.5        Headings. All headings are inserted for convenience of reference only
and shall not affect the meaning or interpretation of any such provisions or of
this Agreement, taken as an entirety.

9.6        Severability. If and to the extent that any court of competent
jurisdiction holds any provision (or any part thereof) of this Agreement to be
invalid such holding shall in no way affect the validity of the remainder of
this Agreement.

9.7        No Negative Construction Against Drafting Party. The parties
acknowledge that they are sophisticated and are represented by experienced,
knowledgeable attorneys. The parties agree that the normal rules of construction
to resolve ambiguities against the party whose counsel drafted this Agreement
shall not be followed in the interpretation of this Agreement. Consequently, no
negative inference or interpretation shall be made by a court in

 

19

 

Company:________

Gagne:________

 

 

--------------------------------------------------------------------------------

 

 

enforcing the provisions of this Agreement against the party whose attorney
drafted this Agreement.

9.8        Changes, Waivers, Etc. Neither this Agreement nor any provision
hereof may be changed, waived, discharged or terminated orally, but rather may
only be changed by a statement in writing signed by the party against which
enforcement of the change, waiver, discharge or termination is sought.

9.9        Governing Law. All questions concerning the construction, validity
and interpretation of this Agreement shall be governed and construed in
accordance with the domestic laws of the State of Florida, without giving effect
to any choice of law or conflict of law provision or rule (whether of the State
of Florida or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of Florida.

9.10      Binding Effects. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors, legal
representatives and assigns.

9.11      Entire Agreement. This Agreement together with the agreements
contemplated herein, constitutes the entire agreement of the parties and
supersede all prior agreements and undertakings (including, without limitation,
any term sheet previously entered into by the parties hereto with respect to the
subject matter hereof) both written and oral, between the parties, or any of
them, with respect to the subject matter hereof.

9.12      Parties in Interest. Nothing in this Agreement, express or implied, is
intended to or shall confer upon any person other than the parties hereto (and
their permitted successors and assigns) any right, benefit or remedy of any
nature whatsoever under or by reason of this Agreement.

 

20

 

Company:________

Gagne:________

 

 

--------------------------------------------------------------------------------

 

 

9.13      Interest or Overdue Amounts. Any amounts due to any party hereunder if
not paid when due shall thereafter bear interest at the rate of 12% per annum
until paid.

9.14      Attorneys Fees and Expenses. If any action shall be brought by any of
the parties hereto based upon this Agreement or any of the transactions
contemplated hereby, then, and in such event, the party prevailing in any such
action shall be entitled to recover reasonable legal fees and expenses incurred
by such party in connection with such action.

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the day and year first above written.

EMPIRE FINANCIAL HOLDING COMPANY, a Florida corporation

By:      ________________________

Donald A. Wojnowski Jr.

President

 

KEVIN M. GAGNE, individually and as trustee of the Gagne First Revocable Trust

 

________________________________________

Kevin M. Gagne

 

 

21

Company:________

Gagne:________

 

 

 

--------------------------------------------------------------------------------