EXHIBIT 10.1
STOCK PURCHASE AGREEMENT
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
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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 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
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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) 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
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APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL
SATISFACTORY TO THE CORPORATION THAT SUCH REGISTRATION IS NOT
REQUIRED."
(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 $.0001 per share, of which none are issued and outstanding; (iii)
150,000 authorized shares of Series A Convertible Preferred Stock, par value
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$.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 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
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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 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
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broker-dealer and investment adviser in each jurisdiction in which such
registrations has been required. The Company and, to the 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
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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 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
9
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;
(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
10
by the Purchaser 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 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
11
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. 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
12
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 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
13
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 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
14
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 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).
15
(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 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
16
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 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.]
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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
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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
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Xxxxxxxx X. Xxxxxx,
Class A Member
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