EXHIBIT 2.2
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "AGREEMENT") is made this 17th
day of July, 2003, between SUMMIT FINANCIAL HOLDING GROUP, INC., a Florida
corporation (the "HOLDING COMPANY"), SUMMIT BROKERAGE SERVICES, INC., a Florida
corporation (the "COMPANY"), and SUMMIT TRANSITORY SUB, INC., a Florida
corporation ("TRANSITORY SUB") pursuant to which the Company will become a
wholly-owned subsidiary of the Holding Company.
BACKGROUND
A. The parties desire to effect the formation of a holding company
whereby the Company will become a wholly-owned subsidiary of the Holding
Company, and the present shareholders of the Company (except for those who
properly perfect dissenters' rights) will become shareholders of the Holding
Company pursuant to Sections 607.1101 and 607.1105 of the Florida Business
Corporation Act (the "FBCA"), and on the terms and conditions hereinafter set
forth.
B. The authorized capital stock of the Company consists of 50,000,000
shares of common stock, par value $.0001 per share, approximately 28,040,064
shares of which are issued and outstanding on the date hereof (the "COMPANY
COMMON STOCK"), and 5,000,000 shares of blank check preferred stock, of which
150,000 shares are as designated Series A 12% cumulative convertible preferred
stock, of which 125,000 shares are outstanding (the "COMPANY PREFERRED STOCK").
C. The authorized capital stock of the Holding Company is 50,000,000
shares of common (voting) stock (the "HOLDING COMPANY COMMON STOCK"), none of
which is issued or outstanding on the date hereof, and 5,000,000 shares of blank
check preferred stock, of which 150,000 shares are designated as Series A 12%
cumulative convertible preferred stock (the "HOLDING COMPANY PREFERRED STOCK"),
none of which is issued and outstanding on the date hereof.
D. Transitory Sub is a wholly-owned subsidiary of the Holding Company,
formed for the specific purpose of facilitating the transactions contemplated
herein.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and intending to be legally bound hereby, the parties agree as
follows:
ARTICLE I
MERGER; DISSENTERS' RIGHTS
1.1. Merger. Subject to the terms and conditions hereof, and except for
shares of the Company Common Stock held by shareholders of the Company who
perfect their dissenters' rights in accordance with the FBCA (the "EXCLUDED
SHARES"), upon the Effective Date (as hereinafter defined) the Company shall be
merged with and into Transitory Sub such that the Company shall be the surviving
corporation, and by virtue thereof, shall become a wholly-owned subsidiary of
the Holding Company (the "MERGER"). The corporate identity, existence, purposes,
powers, franchises, rights and immunities of the Company shall continue
unaffected and unimpaired by the Merger; and the corporate identity, existence,
purposes, powers, franchises, rights and immunities of Transitory Sub shall be
merged with and into the Company and the Company shall be fully vested
therewith. The separate existence of Transitory Sub, except insofar as otherwise
specifically provided by law, shall cease on the Effective Date (defined below)
of the Merger whereupon the Company and Transitory Sub shall be and become one
single corporation.
1.1.1. Upon consummation of the Merger, each share of common stock
of Transitory Sub outstanding immediately prior to the effectiveness of the
Merger shall be canceled and extinguished
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and concurrently therewith converted into and shall become one (1) share of
common stock of the Company, which share of common stock shall be issued to
Summit Holding in respect of the Merger.
1.1.2. Upon consummation of the Merger, each share of Company Common
Stock outstanding immediately prior to the effectiveness of the Merger shall be
canceled and extinguished and concurrently therewith converted into and shall
become one (1) share of Holding Company Common Stock.
1.1.3. Upon consummation of the Merger, each share of Company
Preferred Stock outstanding immediately prior to the effectiveness of the Merger
shall be canceled and extinguished, and concurrently therewith, converted into
one (1) share of Holding Company's preferred stock.
1.1.4. Each certificate (a "CERTIFICATE") evidencing Company Common
Stock or Company Preferred Stock outstanding immediately prior to the
effectiveness of the Merger shall thereafter represent the right to receive a
certificate evidencing shares of Holding Company Common Stock or Holding Company
Preferred Stock into which such Company Common Stock or Company Preferred Stock,
respectively, was converted in the Merger pursuant to this Article II.
1.1.5. After the Effective Date, each holder of a Certificate
evidencing Company Common Stock or Company Preferred Stock immediately prior to
the Effective Date shall surrender same to the Holding Company and shall receive
in exchange therefore a new certificate, representing the appropriate number of
shares of Holding Company Common Stock or Holding Company Preferred Stock. Until
so surrendered, each Certificate shall, by virtue of the Merger, be deemed for
all purposes to evidence ownership of the appropriate number of shares of common
stock or preferred stock, as applicable, of the Holding Company.
1.1.6. On the Effective Date, the Holding Company shall be
deemed to own all of the issued and outstanding shares of the Company Common
Stock and all of the Company's outstanding Preferred Stock shall be deemed
extinguished; and the holders of the Excluded Stock shall be deemed to no longer
be shareholders of the Company, but rather to be creditors of the Company,
entitled to the payment described in Section 2.5 below.
1.2. Assumption of Plan, Plan Options and Non-Plan Options. Upon
consummation of the Merger, the Company's 2000 Incentive Compensation Plan shall
be assumed by, and become the 2000 Incentive Compensation Plan, of the Holding
Company. Each outstanding option to purchase common stock of the Company,
whether vested or unvested, and whether a plan option or non-plan option, shall
be assumed by the Holding Company. Accordingly, upon consummation of the Merger:
(i) each option assumed by the Holding Company may be exercised solely for
shares of Holding Company Common Stock; (ii) the number of shares of Holding
Company Common Stock subject to each such assumed option shall be equal to the
number of shares of Company Common Stock that were subject to such option
immediately prior to the Effective Date; (iii) the per share exercise price for
shares of Holding Company Common Stock issuable upon the exercise of each such
assumed option shall be equal to the exercise price per share of Company Common
Stock at which such option was exercisable immediately prior to the Effective
Date; and (iv) the provisions of each such option shall otherwise remain
unchanged.
1.3. Assumption of Warrants. Upon consummation of the Merger, each
outstanding warrant to purchase common stock (each, a "WARRANT") of the Company,
whether vested or unvested, shall be assumed by the Holding Company.
Accordingly, upon consummation of the Merger: (i) each Warrant assumed by the
Holding Company may be exercised solely for shares of Holding Company Common
Stock; (ii) the number of shares of Holding Company Common Stock subject to each
such assumed Warrant shall be equal to the number of shares of Company Common
Stock that were subject to such Warrant immediately prior to the Effective Date;
(iii) the per share exercise price for shares of Holding Company Common Stock
issuable upon the exercise of each such assumed Warrant shall be equal to the
exercise price per share of Company Common Stock at which such Warrant was
exercisable immediately prior to the Effective Date; and (iv) the provisions of
each such Warrant shall otherwise remain unchanged.
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1.4 Registration Rights. Upon consummation of the Merger, each
registration rights agreement entered into by the Company with any of its
shareholders or holders of Warrants shall be assumed by the Holding Company.
Accordingly, upon consummation of the Merger, the shares of common stock subject
to registration under all such registration rights agreements shall be shares of
Holding Company Common Stock and all obligations and rights of the Company under
such registration rights agreements shall be solely the obligations and rights
of the Holding Company.
1.5. Consideration. The sole consideration to be paid by the Holding
Company for the shares of Company Common Stock and Company Preferred Stock it
receives in the Merger shall be one share of Holding Company Common Stock for
each share of Company Common Stock and one share of Holding Company Preferred
Stock for each share of Company Preferred Stock. Each share of Holding Company
Common Stock and Holding Company Preferred Stock issued pursuant to this section
shall be fully paid and nonassessable.
1.6. Dissenters' Rights.
1.6.1. Any shareholder of the Company Common Stock who has voted
against the Merger at the meeting of the shareholders of the Company, or who has
given notice in writing at or prior to such meeting to the presiding officer
that such shareholder dissents from the Merger, shall be entitled to dissenters'
rights as provided in the FBCA; and for purposes of the Merger to the extent
such shareholder perfects his or her dissenter's rights in accordance with the
FBCA, the shares of Company Common Stock held by such shareholder shall be
deemed Excluded Shares.
1.6.2. It is expressly understood and agreed that all payments made
to such dissenting shareholders for the value of the Excluded Shares will be
made by the Company, using funds of the Company, and not by the Holding Company;
and the Company shall use reasonable best efforts to document that such payments
are made by the Company using funds of the Company.
1.7. Income Tax Structure of the Merger. The parties agree that the
Merger shall be structured as a down stream merger and for federal income tax
purposes shall qualify as a transaction under Section 351 of the Internal
Revenue Code of 1986, as amended (and the regulations promulgated thereunder)
(the "CODE").
1.8. Effective Date. Subject to and upon satisfaction of all
requirements of law and other conditions contained in this Agreement, the Merger
shall become effective on the date the Articles of Merger are filed with the
Florida Department of State (the "EFFECTIVE DATE").
ARTICLE II
REPRESENTATIONS, WARRANTIES, AND COVENANTS OF THE HOLDING COMPANY
The Holding Company represents, warrants and agrees as follows:
2.1. Organization and Standing. The Holding Company is a corporation
duly organized and validly existing under the laws of the State of Florida.
2.2. Capitalization; Voting Rights. The Holding Company is authorized
to issue 50,000,000 shares of common stock, par value $.0001 per share and
5,000,000 shares of blank check preferred stock, 150,000 of which have been
designated as Series A 12% cumulative convertible preferred stock (the "Holding
Company Preferred Stock"). No shares of stock of the Holding Company are issued
and outstanding on the date hereof; and there are no outstanding options,
warrants, calls, convertible securities, subscriptions, or other commitments or
rights of any nature with respect to the Holding Company Common Stock or the
Holding Company Preferred Stock, other than as provided in this Agreement.
2.3. Authority. The execution, delivery and performance of this
Agreement have been authorized by the Board of Directors of the Holding Company.
Subject to appropriate shareholder and
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regulatory approvals, neither the execution and delivery of this Agreement nor
the consummation of the transactions provided for herein or therein will violate
any agreement to which the Holding Company is a party or by which it is bound,
or any law, order, or decree applicable to the Holding Company, or any provision
of its Articles of Incorporation or Bylaws.
2.4. Absence of Liabilities. Immediately prior to the Effective Date,
the Holding Company will have engaged only in the transactions contemplated by
this Agreement, will have no material liabilities and will have incurred no
material obligations except in connection with its performance of the
transactions provided for in this Agreement.
2.5. Absence of Litigation. The Holding Company is not a party to any
litigation or proceeding, pending or threatened, for the purpose of enjoining,
restraining or preventing the consummation of the transactions contemplated by
this Agreement, or otherwise claiming the Merger is improper.
2.6. Section 351 of the Code. The Holding Company has not taken or
agreed to take any action, nor is aware of any circumstance, that could
reasonably be expected to prevent the Merger from constituting a tax-free
transaction under Section 351 of the Code.
2.6.1. The Holding Company does not currently own any shares of
Company capital stock.
ARTICLE III
REPRESENTATIONS, WARRANTIES, AND COVENANTS OF THE COMPANY
The Company represents, warrants and agrees as follows:
3.1. Organization and Standing. The Company is a corporation duly
organized and existing under the laws of the State of Florida.
3.2. Capitalization; Voting Rights. The Company is authorized to issue
50,000,000 shares of common stock, par value $.0001 per share, of which
approximately 28,040,064 shares are issued and outstanding on the date hereof,
and 5,000,000 shares of blank check preferred stock of which 150,000 shares have
been designated as Series A 12% Cumulative Convertible Preferred Stock and of
which 125,000 shares are outstanding and convertible into a maximum of 143,750
shares of Company Common Stock on the date hereof (the "COMPANY PREFERRED
STOCK"). There are no other convertible securities, or options, warrants, calls,
subscriptions, or other commitments or rights of any nature with respect to the
Company Common Stock outstanding on the date hereof, other than the options and
warrants set forth in Schedule I to this Agreement.
3.3. Authority. The execution, delivery, and performance of this
Agreement have been authorized by the Board of Directors of the Company. Subject
to appropriate shareholder and regulatory approvals, neither the execution and
delivery of this Agreement nor the consummation of the transactions provided for
herein or therein will violate any agreement to which the Company is a party or
by which it is bound, or any law, order, decree applicable to the Company, or
any provision of its Articles of Incorporation or Bylaws.
3.4. Absence of Litigation. The Company is not a party to any
litigation or proceeding pending or threatened for the purpose of enjoining,
restraining or preventing the consummation of the transactions contemplated by
this Agreement, or otherwise claiming that consummation of the Merger is
improper.
3.5. Section 351 of the Code. The Company has not taken or agreed to
take any action, nor is aware of any circumstance, that could reasonably be
expected to prevent the Merger from constituting a tax-free merger under Section
351 of the Code.
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ARTICLE IV
ADDITIONAL COVENANTS OF THE HOLDING COMPANY
The Holding company agrees that between the date hereof and the
Effective Date:
4.1. Best Efforts. The Holding Company shall use its best efforts to
take, or cause to be taken, all actions or do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement,
subject, however, to the requisite vote of the shareholders of the Company in
accordance with the requirements of the FBCA and applicable law and receipt of
required regulatory approvals.
ARTICLE V
ADDITIONAL COVENANTS OF THE COMPANY
The Company agrees that between the date hereof and the Effective Date:
5.1. Shareholders Meeting. The Company shall submit this Agreement to
the vote of its shareholders, as provided by the FBCA and other applicable laws,
at the annual meeting of shareholders of the Company to be held in October 2003,
and any adjournment or postponement thereof.
5.2. Amendment to Company's Articles of Incorporation. Promptly after
the Effective Date, the Company shall amend its articles of incorporation to
provide for capitalization of only 100 shares of authorized common stock, $.0001
par value per share.
5.3. Best Efforts. The Company shall use its best efforts to take, or
cause to be taken, all actions or do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement, subject, however, to
the requisite vote of the shareholders of the Company in accordance with the
requirements of the FBCA and applicable law and receipt of required regulatory
approvals.
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF THE PARTIES
The obligations of the parties to consummate this Agreement and to
carry out the Merger shall be subject to the following conditions:
6.1. Representations and Warranties; Performance of Covenants. The
representations and warranties and covenants set forth herein shall be true as
of and at the Effective Date, and each party shall have performed all
obligations required hereby to be performed by it prior to the Effective Date.
6.2. Shareholder Approval. The shareholders of the Company shall have
duly approved this Agreement in accordance with the requirements of applicable
law, including, without limitation intended, the FBCA.
6.3. Regulatory Approvals. Any federal or state regulatory agency
having jurisdiction (NASD or otherwise) shall have granted any necessary consent
or approval.
6.4. Registration Statement. The Registration Statement on SEC Form S-4
(the "REGISTRATION STATEMENT") filed by the Holding Company, if required
pursuant to the Securities Act of 1933, as amended, covering the shares of the
Holding Company Common Stock to be issued pursuant to this Agreement, shall have
been declared effective by the Securities and Exchange Commission; and no stop
order suspending the effectiveness of the Registration Statement shall have been
issued and no proceeding for that purpose shall have been initiated or, to the
knowledge of the Holding Company, shall be contemplated or threatened by the
Securities and Exchange Commission.
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6.5. Tax Opinion. A tax opinion shall have been obtained from Xxxxxxxxx
Xxxxxxx, P.A., satisfactory in form and substance to the parties.
ARTICLE VII
TERMINATION, WAIVER, AND AMENDMENT
7.1. Circumstances of Termination. Anything herein or elsewhere to the
contrary notwithstanding, this Agreement may be terminated at any time before
the Effective Date (whether before or after action with respect thereto by the
Company's shareholders) only:
7.1.1. By the mutual consent of the Boards of Directors of the
Company and of the Holding Company, as evidenced by an instrument in writing
signed on behalf of each by any two of their respective officers; or
7.1.2. By the Board of Directors of the Company or the Holding
Company if, in the opinion of either party, the Merger would be inadvisable
because of the number of shares of Company Common Stock voted against the Merger
or in respect of which notice is given purporting to dissent from the Merger
shall make the consummation of the Merger inadvisable, or if the Merger would
not be in the best interests of the Company or its or shareholders for any
reason whatsoever.
7.2. Effect of Termination. In the event of the termination and
abandonment hereof, this Agreement shall become void and have no effect, without
any liability on the part of any of the parties hereto, their directors,
officers or shareholders.
7.3. Amendment. Anything herein or elsewhere to the contrary
notwithstanding, to the extent permitted by law this Agreement may be amended at
any time by the affirmative vote of a majority of the Board of Directors of each
of the Company and the Holding Company, whether before or after action with
respect thereto by the Company's shareholders and without further approval of
such amendment by the shareholders of the parties hereto.
ARTICLE VIII
EXPENSES, ETC.
8.1. General. Each party hereto will pay its own expenses incurred in
connection with this Agreement, whether or not the transactions contemplated
herein are effected.
8.2. No Assumption of Liabilities by the Holding Company. It is
expressly understood and agreed that the Holding Company shall not assume, or be
deemed responsible for, any liabilities of the Company or of the shareholders of
the Company.
ARTICLE IX
MISCELLANEOUS
9.1. Restrictions on Affiliates. The Holding Company may cause stock
certificates representing any shares issued to any shareholder who may be deemed
to be an affiliate of the Company, within the meaning of Rule 145 under the
Securities Act of 1933, as amended, to bear a legend setting forth any
applicable restrictions on transfer thereof under Rule 145 and may enter
stop-transfer orders with respect to any such certificates.
9.2. No Brokers. Each of the parties represents to the other that it
has not incurred and will not incur any liability for brokerage fees or agents'
commissions in connection with this Agreement and the transactions contemplated
hereby or thereby.
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9.3. Entire Agreement. This Agreement contains the entire agreement
among the parties with respect to the subject matter hereof and supersedes all
prior agreements, written or oral, with respect thereto.
9.4. Captions. Descriptive headings are for convenience only and shall
not control or affect the meaning or construction of any provisions of this
Agreement.
9.5. Governing Law. This Agreement shall be governed by the laws of the
State of Florida without regard to its conflicts-of-laws principles.
9.6. Counterparts. This Agreement may be executed in any number of
counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
IN WITNESS WHEREOF, this Agreement and Plan of Merger has been executed
as of the day, month and year first above mentioned.
SUMMIT FINANCIAL HOLDING GROUP, INC.
By: /s/ Xxxxxxxx X. Xxxxx
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Name: Xxxxxxxx X. Xxxxx
Title: Chairman and Chief Executive Officer
SUMMIT BROKERAGE SERVICES, INC.
By: /s/ Xxxxxxxx X. Xxxxx
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Name: Xxxxxxxx X. Xxxxx
Title: Chairman and Chief Executive Officer
SUMMIT TRANSITORY SUB, INC.
By: /s/ Xxxxxxxx X. Xxxxx
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Name: Xxxxxxxx X. Xxxxx
Title: President
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