STOCK PURCHASE AGREEMENT EXHIBIT 1
THIS STOCK PURCHASE AGREEMENT (this "AGREEMENT") dated as of April 11,
2003, by and between SUMMIT BROKERAGE SERVICES, INC., a Florida corporation (the
"COMPANY"), and ANTARES CAPITAL FUND III LIMITED PARTNERSHIP, a Delaware limited
partnership (the "PURCHASER").
W I T N E S S E T H:
WHEREAS, the Company desires to sell and issue to the Purchaser and the
Purchaser desires to purchase from the Company Four Million (4,000,000) shares
of the Company's common stock, $.0001 par value per share (the "COMMON STOCK
SHARES"); and
WHEREAS, the parties hereto desire to effectuate the foregoing transaction
based upon the terms and conditions contained herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein, the parties hereto do hereby agree as follows:
1. RECITALS. The foregoing recitals are true and correct and are
incorporated herein by this reference.
2. PURCHASE AND SALE OF SHARES. The Company hereby agrees to sell and
issue to the Purchaser, and the Purchaser hereby agrees to purchase and accept
from the Company, the Common Stock Shares at a purchase price of $0.25 per
share, for an aggregate purchase price of One Million Dollars and No/100
($1,000,000.00) (the "PURCHASE PRICE") for all the Common Stock Shares.
3. PURCHASE PRICE; TRANSFER OF SHARES. On the date hereof (the "CLOSING
DATE"), the Purchaser shall deliver to the Company, by wire transfer or
cashier's check in the Purchaser's discretion, the total amount of the Purchase
Price. Simultaneously with the receipt of such funds and the execution and
delivery of such other documents as may be required pursuant to this Agreement,
the Company shall cause to be issued all of the Common Stock Shares to the
Purchaser by delivering on the Closing Date to the Company's transfer agent
irrevocable instructions in form and content reasonably satisfactory to the
Purchaser to issue a stock certificate to Purchaser representing the Purchaser's
ownership of the Common Stock Shares. Such stock certificate shall be delivered
to Purchaser via Federal Express or other overnight courier no later than three
(3) business days after the Closing Date.
4. REPRESENTATIONS AND WARRANTIES OF PURCHASER. The Purchaser hereby
represents, warrants and covenants to the Company that:
(a) Review and Evaluation of Information Regarding the Company. The
Purchaser has had an opportunity to examine the governing instruments and the
material disclosure and other documents and records of the Company, including
without limitation, the Company's Form 10-KSB for fiscal 2002, the Company's
Form 10-KSB for fiscal 2001, all reports on Form 10-QSB for 2002, all reports on
Form 8-K filed during 2002 and 2003, the Company's Information Statements as
filed on Schedule 14F-1 for 2002, the Company's Definitive Proxy Statement as
filed on Form 14A on August 12, 2002, the Company's audited financial statements
for the fiscal years ended December 31, 2001 and 2002, the Company's
Confidential Private Offering Memorandum dated October 14, 2002 (the "OFFERING
MEMORANDUM") for a private placement of the Company's Common Stock which closed
in March 2003 (the "COMMON STOCK PRIVATE OFFERING"), all press releases and such
additional financial and other information as requested by the Purchaser. The
Purchaser has had an opportunity to ask questions and
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receive answers from the Company and its representatives concerning the
Company's financial condition and business and to obtain such other information
that the Purchaser deemed necessary to make a fully informed decision. The
Purchaser has conducted such investigations of the Company as the Purchaser
deems appropriate for the Purchaser's investment in the Common Stock Shares.
(b) Purchaser's Financial Experience. The Purchaser is a private venture
entity whose principals possess sufficient experience in financial and business
matters to be capable of evaluating the merits and risks of this investment.
(c) Suitability of Investment. The Purchaser understands that the Common
Stock Shares represent a speculative investment and involve a high degree of
risk, including but not limited to: no guarantee of success of the business of
the Company; Purchaser may not receive any return (economic or otherwise) on its
investment, and Purchaser may have little or no influence, other than the board
representation described in Section 8(b)(i), to determine the financial picture,
operations and potential dissolution of the Company. The Purchaser has evaluated
the merits and risks of its proposed investment in the Common Stock Shares and
has determined that this is a suitable investment. The Purchaser has adequate
financial resources for an investment of this character, and, at this time, the
Purchaser could bear a complete loss of its investment. Further, the Purchaser
is an "accredited investor" as that term is defined under Rule 501(a) of
Regulation D promulgated under the Securities Act of 1933, as amended (the
"SECURITIES ACT"), in that all of the equity owners of the Purchaser are
accredited investors.
(d) Investment Intent. The Purchaser is purchasing the Common Stock Shares
for investment purposes only and for its own account, and, except as
contemplated by that certain Registration Rights Agreement entered into by the
parties hereto concurrently herewith (the "REGISTRATION RIGHTS AGREEMENT") and
that certain Co-Sale and Voting Rights Agreement entered into by the Purchaser
and Xx. Xxxxxxxx X. Xxxxx concurrently herewith (the "CO-SALE AGREEMENT"), the
Purchaser has no present commitment, agreement or intention to sell, distribute
or otherwise dispose of any of them or to enter into any such commitment or
agreement.
(e) Unregistered Shares; Limitations on Disposition. The Purchaser
understands that the Common Stock Shares are "restricted securities" under the
Securities Act and are being sold without registration under federal or any
state securities laws ("SECURITIES LAWS") by reason of specific exemptions from
registration, and that the Company is relying on the information given herein in
its determination of whether such specific exemptions are available. The
Purchaser understands that because the Common Stock Shares have not been
registered under the Securities Laws, they cannot be sold unless and until they
are subsequently registered or an exemption from registration is available. The
Company has agreed to register the Common Stock Shares pursuant to the
Registration Rights Agreement. The Purchaser acknowledges and understands that
the certificates evidencing the Common Stock Shares will bear a restrictive
legend to the effect of subsection 4(j) below. The Purchaser represents that he
can afford to hold the Common Stock Shares for an indefinite period of time. The
Purchaser understands that although the Company's common stock is quoted on the
OTC Bulletin Board ("OTCBB"), there is not an active trading market for the
Company's common stock and that an active trading market for the Common Stock
Shares may never exist.
(f) Rule 144. The Purchaser is familiar with the provisions of Rule 144
promulgated under the Securities Act, which, in substance, permits limited
public resale of "restricted securities" acquired, directly or indirectly, from
the issuer thereof, in a nonpublic offering subject to the satisfaction of
certain conditions. The Common Stock Shares may be resold in certain limited
circumstances subject to the provisions of Rule 144, which requires among other
things: (i) the availability of certain public information about the Company;
(ii) the resale occurring not less than one year after the party has purchased,
and made full payment for, within the meaning of Rule 144, the securities to be
sold; and (iii)
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in the case of an Affiliate (as such term is defined in Rule 405 of the
Securities Act), or of a non-Affiliate who has held the securities less than two
years, the sale being made through a broker in an unsolicited "broker's
transaction" or in transactions directly with a market maker (as defined in the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT")) and the amount
of securities being sold during any three month period not exceeding the
specified limitation therein, if applicable. The Company hereby covenants to use
its best efforts to ensure hereafter the availability of Rule 144 as a mechanism
for resale of the Common Stock Shares by the Purchaser, such efforts to include,
without limitation, maintaining adequate current public information with respect
to the Company within the meaning of Rule 144.
(g) Non-Reliance Regarding Tax Consequences. The Purchaser is not relying
on the Company, its principals, employees or agents, or any representation
contained herein with respect to the tax effect of its investment in the Common
Stock Shares or the other transactions contemplated in this Agreement. The
Purchaser has reviewed with the Purchaser's own tax advisors the federal, state,
local and foreign tax consequences of this investment and the transactions
contemplated by this Agreement. The Purchaser is relying solely on such advisors
and not on any statements or representations of the Company, or any of its
representatives. The Purchaser understands that the Purchaser (and not the
Company) shall be responsible for the Purchaser's own tax liability that may
arise as a result of this investment or the transactions contemplated by this
Agreement.
(h) Risks of Investment in the Common Stock Shares. The Purchaser
understands and has been advised by the Company that the business activities of
the Company and an investment in Company are subject to substantial risks,
including those described in Company's Annual Report on Form 10-KSB for its
fiscal year ended December 31, 2001, as well as the Company's Confidential
Private Offering Memorandum dated October 14, 2002, copies of which have been
delivered to and reviewed by the Purchaser.
(i) Authority to Enter into Agreement; No Disqualification. The Purchaser
has the full right, power and authority to execute and deliver this Agreement
and the other documents, instruments and agreements contemplated hereby
(including, without limitation, the Registration Rights Agreement), and to
perform of all of the Purchaser's obligations hereunder and thereunder. All
partnership consents, including the consent of the Class A members of the
general partner of Purchaser, necessary for the authorization, execution,
delivery and performance of this Agreement by the Purchaser and the other
documents, instruments and agreements contemplated hereby, have been obtained by
Purchaser. Upon execution and delivery by the Company and the Purchaser, this
Agreement will constitute the valid and legally binding obligation of the
Purchaser, enforceable in accordance with its terms, subject to laws of general
application relating to bankruptcy, insolvency and the relief of debtors and
rules of law governing specific performance, injunctive relief or other
equitable remedies.
(j) Legends. The Purchaser has been advised by the Company that each
certificate representing the Common Stock Shares will be endorsed with the
following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE
SECURITIES LAWS. THE SHARES MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THESE SHARES UNDER
THE ACT AND APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL
SATISFACTORY TO THE CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED."
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(k) State of Organization. The Purchaser is a limited partnership
organized under the laws of the State of Delaware.
(l) '34 Act Filings. After the Closing Date and in accordance with the
requirements of the Exchange Act and the rules promulgated thereunder, the
Purchaser shall complete and cause to be timely filed with the SEC on its behalf
a Schedule 13D in connection with the securities it will receive hereunder and,
when and if applicable, a Form 3 by the Purchaser and/or the Purchaser's
representative to the Company's board of directors, if any.
(m) No Breach. The execution and delivery of this Agreement, and the other
documents, instruments and agreements contemplated hereby, and the consummation
of the transactions contemplated hereby, will not (i) materially conflict with
or result in a material breach of the terms, conditions or provisions of, or
constitute a material default (or an event which, with notice or lapse of time,
would constitute a material default) under, or result in the creation of any
security interest upon any of the properties or assets of the Purchaser under,
any note, mortgage, indenture, deed of trust, lien, lease, agreement, contract,
license, permit or other instrument or restriction to which the Purchaser is a
party or by which it or any of its properties or assets may be bound or
affected, except for conflicts, breaches, defaults, and/or security interests
which, individually or in the aggregate, would not have a material adverse
effect on the Purchaser, or (ii) result in a material violation of any law,
statute, rule, regulation, instrument, order, judgment or decree to which the
Purchaser is subject.
5. REPRESENTATIONS AND WARRANTIES OF COMPANY. Except as disclosed by the
Company in the Disclosure Schedule attached as Exhibit A hereto, the Company
hereby represents, warrants and covenants to the Purchaser that:
(a) Organization and Standing. The Company is a corporation duly
organized, validly existing and in good standing, and its status is active,
under the laws of the State of Florida. The Company and each of its subsidiaries
has all requisite corporate power and authority to own and operate its
properties and assets, and to carry on its business as presently conducted and
as currently proposed to be conducted. The Company and each of its subsidiaries
is duly qualified and authorized to transact business and is in good standing as
a foreign corporation in each jurisdiction in which the failure so to qualify
would have a material adverse effect on its business, properties, prospects or
financial condition. The Company is in compliance with all provisions of its
Articles of Incorporation and By-laws and is not in default under, or in
violation of, any such provisions.
(b) Corporate Power. The Company has all requisite legal and corporate
power and authority to (i) execute and deliver this Agreement, and the other
documents, instruments and agreements contemplated hereby (including, without
limitation, the Registration Rights Agreement), (ii) sell and issue the Common
Stock Shares hereunder, and (iii) carry out and perform its obligations under
the terms of this Agreement, and under each of the other documents, instruments
and agreements contemplated hereby (including, without limitation, the
Registration Rights Agreement), and the transactions contemplated hereby and
thereby.
(c) Capitalization. Immediately prior to the consummation of the
transaction described herein, the Company's capitalization consists of the
following: (i) 50,000,000 authorized shares of common stock, par value $.0001
per share (the "COMMON STOCK"), of which 23,140,064 shares are issued and
outstanding; (ii) 4,850,000 authorized shares of blank check preferred stock,
par value $.0001 per share, of which none are issued and outstanding; (iii)
150,000 authorized shares of Series A Convertible Preferred Stock, par value
$.0001 per share ("Series A Preferred Stock"), 125,000 shares of which are
issued and outstanding and convertible, in the aggregate, up to 150,000 shares
of Common Stock, subject to certain adjustments; (iv) warrants that entitle
their holders to purchase, in the aggregate
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1,020,000 shares of Common Stock at a purchase price of $.30 per share; and (v)
options that entitle their holders to purchase, in the aggregate, 11,808,514
shares of Common Stock at a weighted average purchase price of $.57 per share, a
detailed schedule of which options, setting forth their exercise price, vesting
schedule (if any) and termination date, is set forth in Section 5(c) of Exhibit
A hereto. Immediately following the consummation of the transaction described
herein, the number of issued and outstanding shares of Common Stock will
increase by 4,080,000 to 27,220,064 while the number of issued and outstanding
shares of Common Stock covered under warrants will increase by 400,000 to
1,420,000 at a purchase price of $.30 per share. Except as described herein,
there are no convertible securities, options, warrants, phantom stock,
conversion or exchange rights, preemptive rights, rights of first refusal, stock
appreciation rights, or similar rights presently outstanding (whether contingent
or otherwise) with respect to the Company. All of the issued and outstanding
shares of capital stock and other securities of the Company have been duly
authorized and validly issued, are fully paid and nonassessable, and have been
offered, sold and issued by the Company in compliance with all applicable
federal and state securities laws.
(d) Use of Proceeds. The Company intends to use the proceeds from the
sale of the Common Stock Shares for recruiting, acquisitions and working
capital; provided, however, the Company does not represent that uses of such
proceeds will not vary, subject to unforeseen events.
(e) Authorization. All corporate action on the part of the Company, its
officers, directors and shareholders necessary for (i) the authorization,
execution, delivery and performance of this Agreement, and the other documents,
instruments and agreements contemplated hereby (including, without limitation,
the Registration Rights Agreement), by the Company, (ii) the authorization,
offering, sale, issuance (or reservation for issuance) and delivery of the
Common Stock Shares and (iii) the performance of all of the Company's
obligations hereunder and under the other documents, instruments and agreements
contemplated hereby (including, without limitation, the Registration Rights
Agreement), have been taken prior to the Closing Date. Upon execution and
delivery by the Company and the Purchaser, this Agreement will constitute the
valid and legally binding obligation of the Company, enforceable in accordance
with its terms, subject to laws of general application relating to bankruptcy,
insolvency and the relief of debtors and rules of law governing specific
performance, injunctive relief or other equitable remedies.
(f) Valid Issuance of Shares. The Common Stock Shares when issued, sold
and delivered in compliance with the provisions of this Agreement, will be duly
and validly issued, fully paid and nonassessable and issued in compliance with
all applicable federal and state securities laws. The Common Stock Shares will
be free and clear of any liens or encumbrances (except as such derive from the
Purchaser, as to which no representation and warranty is made by the Company
herein); provided, however, that the Common Stock Shares may be subject to
restrictions on transfer under applicable state and/or federal securities laws.
The Common Stock Shares are not subject to any preemptive rights, rights of
first refusal or restrictions on transfer, except as such transfer restrictions
may be imposed by federal and state securities laws and except as expressly
provided in the Registration Rights Agreement.
(g) Offering. Subject to the accuracy of the Purchaser's
representations in Section 4 hereof, and to its compliance with all applicable
state and federal securities laws relating to its purchase of the Common Stock
Shares, the offer, sale and issuance of the Common Stock Shares pursuant to the
terms of this Agreement constitute transactions exempt from the registration
requirements of Section 5 of the Securities Act, and Florida state blue sky
laws, and are being made pursuant to Section 4(2) of the Securities Act and Rule
506 of Regulation D promulgated under the Securities Act.
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(h) Broker-Dealer Registration; Etc.
(i) The Company is registered as a broker-dealer with the Securities
and Exchange Commission (the "COMMISSION") and the Securities Division of the
Florida Department of Banking and Finance, and is a member in good standing of
the National Association of Securities Dealers (the "NASD").
(ii) The Company and, to the extent applicable, its subsidiaries and
other Affiliates (and as to such "other Affiliates," the statements made in this
subsection are to the knowledge of the Company), have filed all forms and
reports (including all amendments thereto) required to be filed with the
Commission, each of which forms and reports has complied with the Exchange Act
or the Investment Advisers Act of 1940, as amended, as the case may be, each as
in effect on the date so filed. None of such forms or reports contained, when
filed, any untrue statement of material fact required to be stated or
incorporated by reference therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading. Except
to the extent revised or superseded by a subsequent filing with the Commission,
none of such forms or reports contains any untrue statement of a material fact
or omits to state a material fact required to be stated or incorporated by
reference therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. Neither
the Company nor its subsidiaries or other Affiliates are currently delinquent in
filing any such forms or reports.
(iii) The Company and, to the extent applicable, its subsidiaries
and other Affiliates (and as to such "other Affiliates," the statements made in
this subsection are to the knowledge of the Company), have filed all reports
required to be filed with the NASD and any and all other applicable
self-regulatory organizations (collectively, "SRO REPORTS"), each of which has
complied with the rules of the applicable self-regulatory organizations, each as
in effect on the date so filed. None of the SRO Reports contained, when filed,
any untrue statement of material fact required to be stated or incorporated by
reference therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Except to the extent
revised or superseded by a subsequent filing with the NASD or other
self-regulatory organization, none of the SRO Reports contains any untrue
statement of a material fact or omits to state a material fact required to be
stated or incorporated by reference therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(i) Material Changes. Other than continuing operating losses incurred
in the ordinary course of business, there has been no material adverse change in
the Company's (including, without limitation, its subsidiaries, if any) assets,
liabilities, properties, net worth, financial condition, businesses or
operations, as disclosed in the Company's Offering Memorandum, Form 10-KSB for
fiscal 2002, and as further disclosed in the Company's Form 8-K filings
subsequent to December 31, 2002, nor has there been, a material adverse change
in the Company's (including, without limitation, its subsidiaries and other
Affiliates) relationship, individually or in the aggregate, with its lenders,
suppliers, customers, accountants, employees or its securities clearing firm, or
any other parties with which it has a material relationship, whether occurring
in the ordinary course of business or otherwise; provided, however, no
representation or warranty is given with respect to the effect on the Company of
current economic and market conditions generally. Except as set forth in the
Financial Statements (as hereinafter defined), the Company has no liabilities,
contingent or otherwise, other than liabilities incurred in the ordinary course
of business that are not required under generally accepted accounting principles
in the U.S. ("GAAP") to be reflected in the Company's audited financial
statements for fiscal 2002 and the notes thereto included in its Form 10-KSB for
fiscal 2002 (the "Financial Statements"), and which, individually or in the
aggregate, are not material to the assets, liabilities, properties, net worth,
financial condition, businesses
6
or operations of the Company. The Financial Statements have been prepared in
accordance with GAAP and fairly present the financial position of the Company at
the date thereof and the results of operations of the Company for the period
covered thereby.
(j) Tax Matters. The Company and each of its subsidiaries have timely
filed all income and other Tax returns for Taxes (collectively, "Tax Returns"),
if any, that are required to be filed, and if such Tax Returns have not been
timely filed, any such untimely filing will not have a material adverse effect
on the Company or its business. These returns are true and correct in all
material respects. Except for Taxes contested by it in good faith, the Company
and each of its subsidiaries have paid, or made provision for the payment of,
all Taxes that have become due pursuant to said returns or pursuant to any
assessment that has been received from any taxing authority for the period
through the date of the Financial Statements. The provisions made for Taxes
reflected in the Financial Statements are sufficient for the payment of all
Taxes of the Company through the Closing Date. For the purposes hereof, "Taxes"
means all net or gross income, gross receipts, net proceeds, sales, use, ad
valorem, value added, franchise, bank shares, withholding, payroll, employment,
excise, property, deed, stamp, alternative or add-on minimum, environmental, or
other taxes, assessments, duties, fees, levies, or other governmental charges or
assessments of any nature whatever imposed by any governmental requirement,
whether disputed or not, together with any interest, penalties, or additional
amounts with respect thereto.
(k) Subsidiaries. Except as set forth in Section 5(k) of Exhibit A
hereto, the Company has no subsidiaries or other affiliated companies and does
not otherwise own or control, directly or indirectly, any equity interest in any
corporation, association or other business entity. The Company is not a
participant in any joint venture, partnership or similar arrangement.
(l) Consents. No consent, approval, qualification, order or
authorization of, or filing with, any governmental authority is required in
connection with (i) the Company's valid execution, delivery or performance of
this Agreement and the other documents, instruments and agreements contemplated
hereby (including, without limitation, the Registration Rights Agreement), and
the transactions contemplated herein and therein, or (ii) the offer, sale or
issuance of the Common Stock Shares by the Company, or the consummation of any
other transaction contemplated on the part of the Company hereby.
(m) No Breach. The execution and delivery of this Agreement, and the
other documents, instruments and agreements contemplated hereby, and the
consummation of the transactions contemplated hereby, will not (i) conflict with
or result in a breach of the terms, conditions or provisions of, or constitute a
default (or an event which, with notice or lapse of time, would constitute a
default) under, or result in the creation of any security interest upon any of
the properties or assets of the Company under, any note, mortgage, indenture,
deed of trust, lien, lease, agreement, contract, license, permit or other
instrument or restriction to which the Company or any of its subsidiaries is a
party or by which any of them or their respective properties, assets or
liabilities may be bound or affected, or (ii) result in a material violation of
any law, statute, rule, regulation, instrument, order, judgment or decree to
which the Company or any of its subsidiaries is subject.
(n) Branch Offices; Licenses. As of March 25, 2003, the Company has, in
addition to its home office located in Indialantic, Florida, a total of 59
branch and non-branch locations, of which 46 are NASD registered branches. The
Company has 135 NASD registered representatives. The Company is licensed as a
broker/dealer in 46 States (all except for North Dakota, New Hampshire, Maine
and Vermont). Through certain of its subsidiaries, the Company is licensed as an
insurance broker in 26 States. The Company has filed an investment adviser
notice in 22 States. The Company and, to the extent applicable, its subsidiaries
and/or Affiliates, have registered as a broker-dealer and investment adviser in
each jurisdiction in which such registrations has been required. The Company
and, to the
7
extent applicable, its subsidiaries and/or Affiliates, have filed or caused to
be filed all forms, reports, statements, and documents (including all Form U-4s
on behalf of registered representatives) required to be filed with any state.
All such forms, reports, statements, and documents are accurate in all material
respects.
(o) Permits and Licenses. The Company and, to the extent applicable,
each of its subsidiaries and to the Company's knowledge, its other Affiliates,
have all required permits, licenses, certificates and approvals from all local,
state and federal governmental authorities having jurisdiction over the Company
and/or such subsidiaries and/or Affiliates that are material to the operation of
the Company's business and use of its assets.
(p) Compliance with Laws. The Company and, to the extent applicable,
each of its subsidiaries and to the Company's knowledge, its other Affiliates,
are in compliance with all local, state and federal laws, ordinances, rules and
regulations applicable to the operation of the Company's business and use of its
assets.
(q) Litigation. There are no actions, suits, claims, proceedings or
investigations pending or, to the Company's knowledge, threatened, and neither
the Company nor its subsidiaries are subject to any unsatisfied judgment, order,
award, decision, injunction, or ruling entered, issued, made or rendered by any
court, arbitrator or other governmental authority, in each case, which would or
would seek to delay or prevent the consummation of the transactions contemplated
in this Agreement or in any of the other documents, instruments and agreements
contemplated hereby (including, without limitation, the Registration Rights
Agreement), or which may adversely affect or restrict the Company (or its
subsidiaries) and/or their respective assets, liabilities, properties, net
worth, financial condition, businesses or operations. A list of the arbitrations
to which the Company is currently a party is set forth in Section 5(q) of
Exhibit A attached hereto.
(r) Certain Related Party Obligations. The Company's Form 10-KSB for
fiscal 2002 contains a true, correct and complete description of any and all
Related Party Transactions (defined below) and any and all amounts payable by
the Company to, or receivable by the Company from, in each case as a debt or
other financial obligation (whether or not evidenced by a formal or other
written instrument) any of its officers, directors, other Affiliates or
Educational Seminars of America, Inc.
(s) Material Contracts. Except for documents that have been filed with
the Commission pursuant to the Company's periodic reports under the Exchange
Act, the Company is not a party to any management, service, supply, maintenance,
employment, or other contracts which are material to the operation of the
Company's businesses or use of its assets other than its clearing agreements
with Xxxx Xxxxxxxx, Inc. and First Clearing Corp., which are currently in good
standing and no material breach or default exists thereunder.
(t) Registration Rights. The Company is under no obligation to register
any of its presently outstanding securities or any of its securities that may
hereafter be issued pursuant to this or any other existing agreement, except as
provided for in: (i) the Registration Rights Agreement; (ii) the registration
rights agreements issued to investors who purchased shares in the Company's
Common Stock Private Offering (the "Private Offering Investors"), and (iii) the
warrants to be issued to selling agents in the Common Stock Private Offering,
and in connection with this transaction as noted in Section 12 hereof, which
warrants will provide for piggyback registration rights in connection with the
registration of the Company's Common Stock; provided however, any such
registration rights shall not be more favorable than those provided to the
Purchaser and the Private Offering Investors; and provided, further, the holders
of such warrants shall be subject to the same lock-up period for resale of the
underlying Common Stock as the Purchaser and the Private Offering Investors.
Other than as disclosed in the
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Company's Form 10-KSB for fiscal 2002, as well as pursuant to the Co-Sale
Agreement, to the Company's knowledge, no shareholder of the Company has entered
into any agreement with respect to the voting of equity securities of, or as to
any other matter related to, the Company (including, but not limited to, rights
of first refusal, tag along rights, drag along rights, co-sale and other rights
related to the sale and/or transfer of the Company's securities).
(u) Brokers. Except as disclosed in Section 12 of this Agreement,
neither the Company nor any officer, director, employee or shareholder of the
Company has employed any broker or finder in connection with the transactions
contemplated hereby.
(v) Insurance. The Company has general commercial, fire, casualty, D&O
and E&O insurance policies, all as described in Section 5(v) of Exhibit A
hereto.
(x) Full Disclosure. The Company has provided the Purchaser with all
information requested by the Purchaser in connection with its decision to
purchase the Common Stock Shares. All material information regarding the Company
and/or its assets, liabilities, properties, net worth, financial condition,
businesses and operations and regarding the Company's ability to consummate the
transactions contemplated in this Agreement and in any of the other documents,
instruments and agreements contemplated hereby (including, without limitation,
the Registration Rights Agreement), has been disclosed in the Company's Form
10-KSB for 2002, and/or the Company's periodic reports with the Commission made
pursuant to the Exchange Act. Neither this Agreement, the exhibits hereto, nor
any other documents, instruments or agreements (including, without limitation,
the Registration Rights Agreement) delivered by the Company to the Purchaser or
its attorneys or agents in connection herewith or therewith, contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements contained herein or therein not misleading.
6. PURCHASER'S CONDITIONS TO CLOSING. The Purchaser's obligations to
purchase the Common Stock Shares are subject to the fulfillment of the following
conditions on or prior to the Closing Date:
(a) Representations and Warranties Correct. The representations and
warranties made by the Company in this Agreement (including, without limitation,
Section 5 hereof) and/or in any other certificate, agreement, document and/or
instrument executed and delivered in connection herewith, shall be true and
correct in all material respects as of the Closing Date.
(b) Covenants. All covenants, agreements and conditions contained in
this Agreement, and/or in any other certificate, agreement, document and/or
instrument executed and delivered in connection herewith, to be performed by the
Company on or prior to the Closing Date shall have been performed or complied
with.
(c) Additional Documents. The following agreements and documents shall
be executed and delivered to the Purchaser at closing on the Closing Date:
(i) the Co-Sale Agreement;
(ii) the Registration Rights Agreement;
(iii) a certificate, dated as of the Closing Date and signed on its
behalf by the Company's chief executive officer to the effect that the
conditions set forth in Sections 6(a), 6(b), 6(d), and 6(e) have been
satisfied, all in such reasonable detail as the Purchaser and its counsel
shall request;
9
(iv) a certificate duly executed by the Company's secretary
certifying as to the incumbency of the Company's executive officers and
having attached thereto (i) the Company's Articles of Incorporation
(including the Articles of Amendment (defined below)) as in effect at the
Closing Date, (ii) the Company's By-laws as in effect at the Closing Date,
(iii) resolutions approved by the Board of Directors and shareholders (if
applicable) evidencing the taking of all corporate action necessary to
authorize the execution, delivery, and performance of this Agreement and
the other documents, instruments and agreements contemplated hereby
(including, without limitation, the Registration Rights Agreement), and
the consummation of the transactions contemplated hereby and thereby, and
(iv) good standing certificates with respect to the Company from the
Department of State of the State of Florida, dated a recent date before
the Closing Date, all in such reasonable detail as the Purchaser and its
counsel shall request;
(v) an opinion from Xxxxxxxxx Traurig, PA, counsel to the Company,
addressed to the Purchaser, dated as of the Closing Date, containing the
opinions set forth in Exhibit B attached hereto, and in such final form as
is reasonably acceptable to the Purchaser and its counsel; and
(vi) evidence reasonably satisfactory to the Purchaser and its
counsel that each and all certificates representing the ownership of any
of the Leeds Affiliates (as defined in Section 8(b)(iii)) with respect to
Common Stock includes the legend required by Section 3.1 of the Co-Sale
Agreement.
(d) Filing of Articles of Amendment. The Articles of Amendment to the
Articles of Incorporation of the Company re-designating the 2,500,000 authorized
shares of the Company's Series B 8% Cumulative Convertible Preferred Stock as
blank check preferred stock (the "ARTICLES OF AMENDMENT") will have been duly
authorized and filed with, and received by, the Secretary of State of Florida on
or before the Closing Date.
(e) Consents, Permits and Waivers. The Company will have obtained any
and all material consents, permits and waivers necessary or appropriate for the
execution, delivery, and performance by the Company of this Agreement and the
other documents, instruments and agreements contemplated hereby (including,
without limitation, the Registration Rights Agreement), and the consummation by
the Company of the transactions contemplated hereby and thereby.
7. COMPANY'S CONDITIONS TO CLOSING. The Company's obligation to sell and
issue the Common Stock Shares is, at the option of the Company, subject to the
fulfillment of the following conditions:
(a) Representations. The representations and warranties made by the
Purchaser in this Agreement (including, without limitation, Section 4 hereof)
and/or in any other certificate, agreement, document and/or instrument executed
and delivered in connection herewith, shall be true and correct in all material
respects as of the Closing Date.
(b) Covenants. All covenants, agreements and conditions contained in
this Agreement, or in any other certificate, agreement, document and/or
instrument executed and delivered in connection herewith, to be performed by the
Purchaser on or prior to the Closing Date shall have been performed or complied
with.
10
(c) Additional Documents. The following agreements and documents shall
be executed and delivered to the Company at closing on the Closing Date:
(i) a certificate dated as of the Closing Date and signed on its
behalf by the general partner of the Purchaser to the effect that the
conditions set forth in Sections 7(a) and 7(b) have been satisfied, all in
such reasonable detail as the Company and its counsel shall request;
(ii) a certificate duly executed by the general partner of the
Purchaser certifying as to the status of the general partner under the
Purchaser's limited partnership agreement and its authority to execute,
deliver and perform, on behalf of the Purchaser, this Agreement and the
other documents, instruments and agreements contemplated hereby and having
attached thereto the Purchaser's Certificate of Limited Partnership and
Agreement of Limited Partnership as in effect on the Closing Date; (ii)
resolutions approved by the Class A Members of the general partner of
Purchaser evidencing the taking of all partnership and limited liability
company action necessary to authorize the execution, delivery, and
performance of this Agreement and the other documents, instruments and
agreements contemplated hereby, and the consummation of the transactions
contemplated hereby and thereby, and (iii) good standing certificates with
respect to the Purchaser and the general partner from, as applicable, the
Secretary of State of Delaware and the Florida Department of State, dated
a recent date before the Closing Date, all in such reasonable detail as
the Company and its counsel shall request;
(iii) the Co-Sale Agreement; and
(iv) the Registration Rights Agreement.
8. ADDITIONAL AGREEMENTS OF THE PARTIES.
(a) D&O Insurance; Indemnification: The Company shall, at all times during
the Applicable Period (defined below), (i) maintain a minimum of $1,000,000 of
Directors' and Officers' ("D&O") liability insurance coverage for its directors
and executive officers and (ii) indemnify, to the fullest extent permitted by
law, the members of its board of directors. The Company further agrees to, as
and when any representative of the Purchaser is elected or otherwise appointed
to the board of directors of the Company, execute and deliver to such
representative an indemnification agreement substantially in the form of Exhibit
C hereto.
(b) Corporate Governance; Other Considerations: The Company and the
Purchaser agree as follows:
(i) Board Membership. At any and all times during which the Purchaser
owns, directly or indirectly through a partner(s) of Purchaser or
any Affiliates of Purchaser or any of its partners, at least two (2)
million of the four (4) million Common Stock Shares acquired herein
(or the equivalent thereof after giving effect to any splits,
mergers, stock dividends, recapitalizations and similar
transactions) (the "APPLICABLE PERIOD"), the Company shall, at the
request of the Purchaser, use its best efforts to nominate, and as
quickly as practicable appoint, to the Company's board of directors
a representative designated by the Purchaser (the "PURCHASER
DIRECTOR"), and to maintain such Purchaser Director as a member of
the Company's board of directors at all times during the Applicable
Period.
11
The Company further agrees, during the Applicable Period, (A) at the
request of the Purchaser, to appoint the Purchaser Director to the
compensation and audit committees of the board of the directors of
the Company and to maintain such Purchaser Director as a member
thereof at all times, (B) to maintain at all times a total of at
least two (2) Independent Directors (as hereinafter defined), (C) to
confine the membership of each of the audit and compensation
committees of the Company's board of directors exclusively to
Independent Directors and at least two (2) thereof, (D) not to
enter, directly or indirectly, into a joint venture, loan or any
other transaction, agreement or arrangement with any Leeds Affiliate
without first obtaining the consent of the majority of the Company's
Independent Directors and (E) not to make any modifications to
Leeds' amended and restated employment agreement with the Company
dated May 22, 2002 without first obtaining the consent of the
majority of the compensation committee of the Company's board of
directors, including, without limitation, any salary and/or benefit
increases necessary and/or appropriate to make Leeds' salary
commensurate with industry standards. As used throughout this
Agreement, the term "INDEPENDENT DIRECTOR" means, either (i) a
Purchaser Director, or (ii) any member of the Company's board of
directors that (X) has not, at any time, directly or indirectly
accepted any consulting, advisory or other compensatory fees from
the Company (other than reasonable board and committee fees), (Y)
has not, directly or indirectly, participated or otherwise been
involved in any Related Party Transactions (as hereinafter defined)
and (Z) qualifies as "independent" under the proposed corporate
governance rules of The Nasdaq Stock Market with respect to the
definition of "director independence" as such rules may be finally
enacted and/or thereafter amended. As used throughout this
Agreement, the term "RELATED PARTY TRANSACTION" means any
transaction, relationship, or series thereof, required to be
described in a registration statement under Securities Act pursuant
to Item 404 of Regulation S-B. The aforesaid notwithstanding, the
parties hereto acknowledge that with respect to the covenant under
clause (C) of this subsection 8(b)(i), one of the members of the
Company's audit and compensation committees is currently not an
Independent Director; therefore, the Company hereby agrees that as
soon as reasonably practical after the Closing Date, the Company
shall, as applicable, reconstitute the audit and compensation
committees to comply with such covenant and, as a result, the
Company shall take no action described under clauses (D) and (E) of
this Subsection 8(b)(i) until so accomplished.
(ii) Observation Rights. To the extent that, at any time after the
Closing Date, and during the Applicable Period, a representative of
the Purchaser shall not be a member of the Company's board of
directors, a representative of the Purchaser designated by the
Purchaser from time to time in its sole discretion (the "PURCHASER
REPRESENTATIVE") shall be entitled to attend as an observer all
meetings of the board of directors of the Company (including, but
not limited to, any and all committees thereof and telephonic
meetings with respect thereto); provided, however, that the
Company's board of directors may require that the Purchaser
Representative not attend any particular meeting of the Company's
board of directors or committees thereof or be excused from any
portions of such
12
meetings that involve matters or business that the Company's board
of directors determines in good faith are matters or business that
must be considered by the Company's board of directors (or the
applicable committee thereof) without the Purchaser Representative
being in attendance; provided, however, that the Purchaser
Representative shall not be excluded from any two (2) consecutive
meetings. Except with respect to matters or business as to which the
Company's board of directors has determined that must be considered
by the board of directors (or the applicable committee thereof)
without the Purchaser Representative being in attendance, the
Purchaser Representative shall be provided with the same meeting
notices and materials as the members of the Company's Board of
Directors (including, without limitation, any and all committees
thereof), including, without limitation, copies of all proposed and
final resolutions, minutes and written consents. The Company shall,
at all times during the Applicable Period during which a Purchaser
Director shall not be a member of the Company's board of directors,
allow the Purchaser Representative (or such other person designated
by the Purchaser Representative from time to time) to be present at
the business offices of the Company during regular business hours
and the Company further covenants to provide to such Purchaser
Representative (and such designee, if any), during regular business
hours, upon seventy-two (72) hours notice to the Chief Executive
Officer of the Company, access to all of the Company's books,
records, files, documentation and other information related to the
past, present and/or future operations of the Company and any of its
subsidiaries or its parent, if any, that are located at the business
offices of the Company or that can be obtained by the Company
without unreasonable cost or effort, and that would normally be
available to a member of the Company's Board of Directors or audit
or other committee of the Board of Directors in the exercise of his
responsibility and fiduciary duties as such. The right of the
Purchaser Representative (and designee, if any) to attend board
meetings and have access to the Company information, including to be
present at the Company's offices, is conditioned upon receipt from
Purchaser and such Purchaser Representative (and designee, if any)
of a confidentiality agreement containing prohibitions on disclosure
of the Company's Confidential Information (defined below) and using
such Confidential Information to the detriment of the Company and/or
its shareholders, which agreement shall be in form and substance
reasonably satisfactory to the Company and the Purchaser.
(iii) Limitation on Securities Issuances. The Company shall not, at any
time during the Applicable Period, directly or indirectly issue any
equity securities or securities convertible, exchangeable and/or
exercisable thereinto, including, without limitation, any Common
Stock, preferred stock, options, warrants, and other equity
equivalents (collectively, "SECURITIES") to any Leeds Affiliate (as
defined below) if the price to be paid for such Securities is below
$.25 per share (or the equivalent thereof after giving effect to any
splits, mergers, stock dividends, recapitalizations and similar
transactions effectuated after the Closing Date). Notwithstanding
the foregoing, during the Applicable Period, the Company may issue
Securities to a Leeds Affiliate at a price below $.25 per share (or
13
the equivalent thereof after giving effect to any splits, mergers,
stock dividends, recapitalizations and similar transactions
effectuated after the Closing Date), subject to and only with the
approval of the majority of the Company's Independent Directors,
under either of the following circumstances: (A) Common Stock,
options and/or warrants, but in no event preferred stock, as
compensation for services in lieu of cash, but only to the extent
that (i) the value placed on such Common Stock and the exercise
price per share for such options or warrants are not, at the time of
issuance, below the greater of (1) the last closing sale price of
the Common Stock on the trading day nearest the issuance date and
(2) the average of the closing sale prices for the Common Stock for
the 20 trading days immediately preceding the issuance date, and
(ii) any and all such issuances (Common Stock, options and/or
warrants) in the aggregate do not exceed 5% of the then outstanding
shares of Common Stock; or (B) in connection with the purchase of
Securities (but in no event preferred stock) by a Leeds Affiliate,
the proceeds of which are necessary for the Company's continued
operations, the completion of a merger or an acquisition (excluding
exercise by Leeds of his currently outstanding options), or such
other appropriate business purpose as is approved by at least a
majority of the board of directors; provided, however, that in the
case of the immediately preceding item (B), the Purchaser will have
the right to participate in such an investment with the applicable
Leeds Affiliates to the extent of the product obtained by
multiplying (i) the aggregate number of Securities covered by the
proposed issuance by (ii) a fraction the numerator of which is the
sum of the number of shares of Common Stock and all options,
warrants and other Common Stock equivalents (whether or not such
options, warrants and other Common Stock equivalents are then "in
the money" or exercisable) then owned by or on behalf of the
Purchaser (including, but not limited to, its partners or Affiliates
other than the Company), and the denominator of which is the sum of
the number of shares of Common Stock and all options, warrants and
other Common Stock equivalents (whether or not such options,
warrants and other Common Stock equivalents are then "in the money"
or exercisable) then owned by or on behalf of the Leeds Affiliates
and the Purchaser (including, but not limited to, its partners and
Affiliates other than the Company). For purposes of this Agreement,
the term "Leeds Affiliates" means, individually and collectively,
(i) Xxxxxxxx X. Xxxxx ("LEEDS'), (ii) each of his family members and
(iii) each entity (other than the Company) which is directly or
indirectly majority-owned by Leeds or any of his family members or
for which Leeds or any of his family members or an entity directly
or indirectly majority-owned by Leeds or any of his family members
serves as the sole or managing general partner or the sole or
managing member. For purposes hereof, a family member of Leeds is
his spouse, children or any other lineal descendants.
(c) SEC Compliance: The Company will agree to use its best efforts to
remain in compliance with any and all applicable rules and regulations as
promulgated by the exchange(s), automated quotation system(s) and the other
quotation system(s) on which the Common Stock is listed or quoted for trading,
as well as the applicable corporate governance rules and regulations as
promulgated by the Commission, the NASD, any and all other applicable
self-regulatory bodies and Congress under the
14
Xxxxxxxx-Xxxxx Act of 2002. The Purchaser agrees that it shall use its best
efforts to timely file all applicable forms with the SEC relating to its
investment in the Company.
(d) Amendment to Employment Agreement: Within thirty (30) days after
the Closing Date, the Company and Leeds shall execute and deliver an amendment
to that certain Amended and Restated Employment Agreement, dated as of May 22,
2002, by and between Leeds and the Company, which shall generally provide that,
during the one year period following the termination of Leeds' employment with
the Company, Leeds will not compete against the Company by providing his
services to any business organizations whose principal business purpose is the
sale of financial products through a network of independent registered
representatives. Such one year period shall not apply in the event Leeds'
employment with the Company is terminated without cause and Leeds accepts no
severance of any kind from the Company in connection with such termination
without cause. The amendment to employment agreement shall be in form and
content acceptable to the Independent Directors and a copy thereof shall be
delivered to Purchaser.
9. CONFIDENTIALITY. The Purchaser agrees that (except as may be required
by law and as contemplated in this Agreement and the other documents,
instruments and agreements contemplated hereby (including, without limitation,
the Registration Rights Agreement)) it will not disclose to third parties or
use, any Confidential Information (as defined below) with respect to the Company
furnished, or to be furnished, by the Company, its agents, employees,
representatives or advisers to the Purchaser in connection herewith at any time
or in any manner and will not use such information other than in connection with
its evaluation of the transactions contemplated herein and in the other
documents, instruments and agreements contemplated hereby (including, without
limitation, the Registration Rights Agreement). For the purposes of this Section
9, "Confidential Information" means the Company business plans, customer lists,
methods of operation, employee and independent contractor information; any other
information identified in writing as confidential to Purchaser by the Company;
and any material non-public information regarding the Company. Notwithstanding
the foregoing, any such Confidential Information may be disclosed: (a) if the
Company consents to such disclosure in writing; or (b) the information becomes
public knowledge through no fault of Purchaser; or (c) if required by law; or
(d) by the Purchaser to its investors, employees, representatives and agents in
connection with its evaluation of the transactions contemplated in this
Agreement and the other documents, instruments and agreements contemplated
hereby (including, without limitation, the Registration Rights Agreement),
provided, however, that Purchaser shall take all reasonable precautions to
prevent disclosure of such Confidential Information by such third parties. The
Purchaser, and the Purchaser's representatives, including such persons who may
serve on the Company's board of directors or have observation rights pursuant to
Section 8(b) above, agree that they will not disclose any material non-public
information unless required by law.
10. INDEMNIFICATION.
(a) The Company shall indemnify the Purchaser and hold him harmless,
upon demand, from and against any losses, damages, costs, claims, expenses and
liabilities, including, without limitation, reasonable attorneys', paralegals'
and accountants' fees and expenses, before and at trial and at all appellate
levels (individually and collectively, "LOSSES"), which the Purchaser may
sustain, suffer or incur arising from or in connection with the Company's
material breach of any covenant, representation, warranty, agreement, obligation
or undertaking of the Company hereunder or in any other documents, instruments
and agreements contemplated hereby (including, without limitation, the
Registration Rights Agreement).
(b) Purchaser shall indemnify the Company and hold it harmless, upon
demand, from and against any Losses which the Company may sustain, suffer or
incur arising from or in
15
connection with the Purchaser's material breach of any covenant, representation,
warranty, agreement, obligation or undertaking of the Purchaser hereunder or in
any other documents, instruments and agreements contemplated hereby (including,
without limitation, the Registration Rights Agreement).
(c) A party hereunder shall have no liability under this
Agreement to indemnify under either Section 10(a) or Section 10(b) above, in
each case unless the party against whom such claim is asserted (the
"Indemnifying Party') receives notice of claim in writing from the party seeking
indemnification (the "Indemnified Party").
(d) All third party claims by any Indemnified Party hereunder shall be
asserted and resolved in accordance with the following provisions. If any claim
or demand for which an Indemnifying Party would be liable to an Indemnified
Party is asserted against or sought to be collected from such Indemnified Party
by such third party, said Indemnified Party shall with reasonable promptness
notify in writing the Indemnifying Party of such claim or demand stating with
reasonable specificity the circumstances of the Indemnified Party's claim for
indemnification; provided, however, that any failure to give such notice will
not waive any rights of the Indemnified Party except to the extent the rights of
the Indemnifying Party are actually prejudiced or to the extent that any
applicable period set forth in Section 10(c) has expired without such notice
being given. After receipt by the Indemnifying Party of such notice, then upon
reasonable notice from the Indemnifying Party to the Indemnified Party, or upon
the request of the Indemnified Party, the Indemnifying Party shall defend,
manage and conduct any proceedings, negotiations or communications involving any
claimant whose claim is the subject of the Indemnified Party's notice to the
Indemnifying Party as set forth above, and shall take all actions necessary,
including but not limited to the posting of such bond or other security as may
be required by any governmental authority, so as to enable the claim to be
defended against or resolved without expense or other action by the Indemnified
Party. The Indemnifying Party shall not, without the written consent of the
Indemnified Party (which consent shall not be unreasonably withheld or delayed),
settle, compromise or offer to settle or compromise any such claim or demand on
a basis which would result in the imposition of a consent order, injunction or
decree which would restrict the future activity or conduct of the Indemnified
Party or any subsidiary and/or other Affiliate thereof or not result in a full
release of the Indemnified Party. Upon request of the Indemnifying Party, the
Indemnified Party shall, to the extent it may legally do so and to the extent
that it is compensated in advance by the Indemnifying Party for any costs and
expenses thereby incurred:
(i) take such action as the Indemnifying Party may reasonably
request in connection with such action,
(ii) allow the Indemnifying Party to dispute such action in the name
of the Indemnified Party and to conduct a defense to such action on behalf of
the Indemnified Party, and
(iii) render to the Indemnifying Party all such assistance as the
Indemnifying Party may reasonably request in connection with such dispute and
defense.
11. PUBLICITY. The Company is subject to the public disclosure
requirements of the Exchange Act and the rules promulgated thereunder. With
respect to this Agreement and the transactions contemplated hereby, the
Purchaser consents to such disclosures and will reasonably assist the Company in
the preparation of such disclosures and any other documents or filings required
by the Securities Laws. However, in no event shall the Purchaser release any
information to the public regarding this Agreement or the transactions
contemplated herein without the prior written consent of the Company; provided,
however, that after the Company has made its public disclosure hereof, which it
hereby agrees to
16
promptly do, the Purchaser may, without the Company's consent, advise its
investors of the details of the Purchaser's investment in the Company; and
provided further that the Company agrees that the Purchaser shall in all events
be permitted to timely, and without the Company's consent, file all required
filings under the Exchange Act.
12. FINDERS / BROKERS. The parties agree that there are no finders
involved in this transaction, other than Xxxxx Xxxxxx, an employee and director
of the Company, who will be paid a commission by the Company which will not
exceed (i) cash in the amount of $80,000, (ii) 80,000 shares of Common Stock,
and (iii) a Common Stock purchase warrant for 400,000 shares of Common Stock at
an exercise price of not less than $.30 per share.
13. GOVERNING LAW; JURISDICTION. This Agreement will be governed by,
construed and enforced in accordance with, the laws of the State of Florida.
Each of the parties hereto irrevocably consents to the exclusive jurisdiction
and venue of any court located within Miami-Dade County or Palm Beach County, in
the State of Florida in connection with any matter based upon or arising out of
this Agreement or the matters contemplated herein, agrees that process may be
served upon them in any manner authorized by the laws of the State of Florida
for such persons and waives and covenants not to assert or plead any objection
which they might otherwise have to such jurisdiction, venue and such process.
14. ENTIRE AGREEMENT; AMENDMENT. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersedes and terminates any prior communication, agreement or
understanding, whether written or oral. This Agreement may be modified only by a
writing signed by all parties.
15. NOTICES. Whenever notice is provided for in this Agreement, it shall
be given in writing and hand delivered, or mailed by registered or certified
mail, return receipt requested, or sent by facsimile to the party or parties to
whom addressed at the addresses or facsimile numbers set forth below: The date
of delivery shall be the date received if delivered by hand or sent by facsimile
with written confirmation received, or within three (3) days of mailing, if
mailed. Any party may change the address to which notice shall be delivered or
mailed by notice given pursuant to this Section 15.
If to Purchaser: Antares Capital Fund III Limited Partnership
0000 Xxxxx Xxxxx Xxxxx Xxxx
Xxxxx Xxxxx, Xxxxxxx 00000
Attn: Xx. Xxxxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
With copy to: Bilzin Xxxxxxx Xxxxx Xxxxx & Xxxxxxx XXX
0000 Xxxxxxxx Financial Center
000 Xxxxx Xxxxxxxx Xxxxxxxxx
Xxxxx, XX 00000-0000
Attn: Xxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
17
If to the Company: Summit Brokerage Services, Inc.
000 Xxxxx Xxxxxxx Xxxxxxx
Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000
Attn: Xxxxxxxx X. Xxxxx, Chairman
Facsimile: (000) 000-0000
With copy to: Xxxxxxxxx Xxxxxxx, P.A.
000 X. Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
16. BENEFITS. This Agreement shall inure to the benefit of, and be binding
upon, the parties hereto and their respective heirs, beneficiaries, legal
representatives, successors, and assigns (including, without limitation,
successive as well immediate successors to and assigns of said parties and
partners or Affiliates of the Purchaser to which it transfers Common Stock
Shares); provided, however, it is understood and agreed that the rights of
Purchaser under Section 8 hereof are exclusive to Purchaser and any transfer of
Common Stock Shares by Purchaser to a third-party who is not a partner of
Purchaser or an Affiliate of Purchaser or any of its partners shall not confer
on such third-party any rights whatsoever under Section 8 of this Agreement.
17. SEVERABILITY. In the event that any of the provisions of this
Agreement, or portions thereof, are held to be unenforceable or invalid by any
court of competent jurisdiction, the validity and enforceability of the
remaining provisions, or portions thereof, shall not be affected thereby.
18. SECTION HEADINGS. The section headings contained herein are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
19. EXECUTION IN COUNTERPARTS; FACSIMILE SIGNATURES. This Agreement may be
executed in several counterparts, each of which shall be an original and all of
which together shall constitute but one and the same instrument. Facsimile
signatures hereto or signed signature pages transmitted and received by
facsimile shall have the same legal force and effect as original signatures.
20. ATTORNEYS' FEES. The prevailing party in any dispute with respect to
this Agreement shall be entitled to recover from the other party all of its
reasonable costs and expenses incurred in connection with such dispute,
including, but not limited to, reasonable attorneys', paralegals', accountant's
and other professionals' fees and costs incurred before and at trial, at any
other proceeding, at all appellate levels and whether or not suit or any other
proceeding is brought.
[SIGNATURES LOCATED ON THE NEXT PAGE.]
18
IN WITNESS WHEREOF, the parties hereto have duly executed this Stock
Purchase Agreement as of the day and the year first set forth above.
THE COMPANY:
SUMMIT BROKERAGE SERVICES, INC.,
a Florida corporation
By: /s/ Xxxxxxxx X. Xxxxx
-----------------------------------
Xxxxxxxx X. Xxxxx,
Chairman and Chief Executive Officer
THE PURCHASER:
ANTARES CAPITAL FUND III LIMITED PARTNERSHIP,
a Delaware limited partnership
By: ANTARES CAPITAL PARTNERS III, L.L.C.,
a Florida limited liability company,
its General Partner
By: /s/ Xxxxxxxx X. Xxxxxx
--------------------------------------
Xxxxxxxx X. Xxxxxx,
Class A Member
19
