EXHIBIT 10.18
FORM OF
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (THE "AGREEMENT"), dated the
Effective Date (as defined below) by and between Summit Brokerage Services, Inc.
a Florida corporation (the "Company"), and the person whose name appears on the
signature page attached hereto (individually a "Holder" and, together with the
holders of other shares of Common Stock Shares of the Company issued in the
Company's private placement offering, hereinafter described as the "Holders").
WHEREAS, pursuant to a Confidential Private Placement Memorandum dated
October 14, 2002 (as amended and supplemented, the "Private Placement
Memorandum"), the Company is offering for sale up to 20,000,000 shares (the
"Offering") of its Common Stock, $.0001 par value per share (the "Common Stock
Shares"), at a price of $.25 per share.; and.
WHEREAS, pursuant to the terms of the Offering and in order to induce
each of the Holders to enter into a certain subscription agreement and
investment letter between the Company and each Holder (each a "Subscription
Agreement" and together the "Subscription Agreements") to purchase Common Stock
Shares, the Company has agreed to enter into this Agreement and grant to the
Holders the registration rights herein.
NOW, THEREFORE, in consideration of the premises, promises and the
mutual covenants contained herein and in the Subscription Agreements, the
Company and Holder hereby agree as follows:
1. Certain Definitions. As used in this Agreement, the following
capitalized terms shall have the following meanings:
"Closing Date" shall be the date the Company closes the
Offering.
"Commission" shall mean the Securities and Exchange
Commission.
"Effective Date" shall mean the date the Company executes this
Agreement.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
"Registrable Stock" shall mean the Common Stock Shares issued
in connection with this Offering, excluding Common Stock Shares (a) which have
been registered under the Securities Act pursuant to an effective registration
statement filed thereunder and disposed of in accordance with the registration
statement covering them or (b) which could be, in the opinion of counsel to the
Company, publicly sold as of the date in question pursuant to Rule 144 under the
Securities Act.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Stock" shall mean the Common Stock Shares.
2. Registration Rights.
(a) "Piggyback Registration". Subject to the Lock-up Provision of
Section 5 herein, if the Company at any time after January 1, 2003 proposes to
register any of its Common Stock under the Securities Act (other than in
connection with (i) a registration on Form S-4 pertaining to a merger or similar
transaction or (ii) registration on Form S-8, or similar forms) the Company
shall request that the managing underwriter (if any) of such underwritten
offering include the Registrable Stock in the registration statement for the
underwritten offering in such registration. If such managing underwriter agrees
to include the Registrable Stock in the registration statement relating to the
underwritten offering, the Company shall at such time give prompt written notice
to all Holders of its intention to effect such registration and of such Holders'
right under such proposed registration, and upon the request of any such Holder
delivered to the Company within twenty (20) days after giving such notice (which
request shall specify the Registrable Stock intended to be disposed of by such
Holder), the Company shall use its reasonable best efforts to include such
Registrable Stock held by such Holder requested to be included in such
registration; provided, however, that:
(i) if the managing underwriter in such underwritten
offering shall advise the Company that it declines to include a portion or all
of the Registrable Stock requested by the Holders to be included in the
registration statement, then distribution of all or a specified portion of the
Registrable Stock shall be excluded from such registration statement (in case of
an exclusion as to a portion of the Registrable Stock, such portion to be
excluded shall be allocated among such Holders and any affiliates of the Company
including securities to be registered in such underwritten offering in
proportion to the respective number of Registrable Stock and other securities
requested to be registered by each such Holder and affiliate). In such event the
Company shall give the applicable Holders prompt notice of the number of
Registrable Stock excluded from such registration at the request of the managing
underwriter. No such exclusion shall reduce the securities being offered by the
Company for its own account to be included in such registration statement;
(ii) the Company may, in its sole discretion and without
the consent of the Holders, delay the filing or effectiveness of the
registration statement or withdraw such registration statement and abandon the
proposed offering in which the Holders had requested to participate, but any
abandonment shall not preclude subsequent request for registration pursuant to
this Section 2 (a).
(b) Option to Include Registrable Stock in Offering. The Holder,
subject to the provisions of Section 2(a), shall have the option to include any
of the Holder's Registrable Stock in the registration statement. The Company
shall not be required to include Holder's Registrable Stock in the registration
statement relating to an underwritten offering of the Company's securities
unless Holder accepts the terms of the underwriting as agreed upon between the
Company and the underwriters selected by it (provided such terms are usual and
customary for selling stockholders) and Holder agrees to execute and/or deliver
such documents in connection with such registration as the Company or the
managing underwriter may reasonably request.
(c) Other Registration. The Company hereby agrees to use its
reasonable best efforts on one occasion to file, within sixty (60) business days
from the closing of this Offering, a registration statement with the Commission
to permit the Registrable Stock to be resold to the public, subject to the
Lock-up Provision under Section 5 hereof; provided however, that such period may
be extended or delayed by the Company for one period of up to 180 days if, upon
the advice of counsel at the time such registration is required to be filed, or
at the time the Company is required to exercise its best efforts to cause such
registration statement to become effective, such delay is advisable and in the
best interests of
the Company because of the existence of non-public material information
(including, without limitation, any pending financing, acquisition, corporate
reorganization or other material transactions involving the Company), or to
allow the Company to complete any audit of its financial statements without
requiring the Company to perform any audit not otherwise necessary. The Company
shall be entitled to include in any registration statement referred to in this
Section 2(c), shares of Common Stock to be sold by the Company for its own
account and if so, then such registration shall be deemed to be a registration
in accordance with and pursuant to Section 2(a).
(d) Cooperation with Company. The Holder will cooperate with the
Company in all respects in connection with this Agreement, including, timely
supplying all information reasonably requested by the Company and executing and
returning all documents reasonably requested in connection with the registration
and sale of the Registrable Stock.
3. Registration Procedures. If and whenever the Company is required by
provisions of this Agreement to use its best efforts to effect the registration
of any of the Registrable Stock under the Securities Act, the Company shall
(except as otherwise provided in this Agreement), as expeditiously as possible:
(a) prepare and file with the Commission a registration statement
and shall use its best efforts to cause such registration statement to become
effective and remain effective for the period of the distribution contemplated
thereby (determined as hereinafter provided).
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective for
the period specified in Section 3(a) and to comply with the provisions of the
Securities Act with respect to the sale or other disposition of all Registrable
Stock covered by such registration statement in accordance with the sellers'
intended method of disposition set forth in such registration statement for such
period;
(c) furnish to each seller of Registrable Stock such numbers of
copies of a summary prospectus or other prospectus, including a preliminary
prospectus or any amendment or supplement to any prospectus, in conformity with
the requirements of the Securities Act, and such other documents, as such
persons may reasonably request in order to facilitate the public sale or other
disposition of the Registrable Stock covered by such registration statement;
(d) use its reasonable best efforts to register and qualify the
Registrable Stock covered by such registration statement under such other
securities or blue sky laws of such jurisdictions as the sellers of the
Registrable Stock or, in the case of an underwritten public offering, the
managing underwriter, reasonably shall request, and do any and all other acts
and things which may be necessary or advisable to enable such seller of
Registrable Stock to consummate the public sale or other disposition in such
jurisdictions of the Registrable Stock owned by such seller, except that the
Company shall not for any such purpose be required to: (i) qualify to do
business as a foreign corporation in any jurisdiction wherein it is not so
qualified or to file therein any general consent to service of process or be
subject to any escrow or other similar conditions; or (ii) take any other
actions or submit itself or its directors or officers to any restrictions,
obligations or burdens having a material adverse economic effect on it or them;
(e) use its reasonable best efforts to list or cause to be quoted
such securities on any securities exchange or national quotation service on
which any securities of the Company are then listed or quoted, if the listing or
quotation of such securities is then permitted under the rules of such exchange
or national quotation service;
(f) enter into and perform its obligations under an underwriting
agreement, if the offering is an underwritten offering, in usual and customary
form, with the managing underwriter or underwriters of such underwritten
offering; and
(g) notify each seller of Registrable Stock and each underwriter
under such registration statement, if any, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act, of the
happening of any event of which it has knowledge as a result of which the
prospectus included in such registration statement, as then in effect, includes
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing.
For purposes of Sections 3(a) and 3(b) hereof, the period of
distribution of Registrable Stock in a firm commitment underwritten public
offering shall be deemed to extend until each underwriter has completed the
distribution of all securities purchased by it, and the period of distribution
of Registrable Stock in any other registration shall be deemed to extend until
the earlier of the sale of all Registrable Stock covered thereby or 180 days
after the expiration of the Lock-up Provision of Section 5.
The Holder will cooperate with the Company in all respects in
connection with this Agreement, including, timely supplying of all information
reasonably requested by the Company and executing and returning all documents
reasonably requested in connection with the registration and sale of the
Registrable Stock.
In connection with each registration covering an underwritten public
offering, the Company and Holder agree to enter into a written agreement with
the managing underwriter containing such provisions as are customary in the
securities business for such an arrangement between an underwriter and companies
of the Company's size and investment stature.
4. Expiration of Registration Rights. The obligations of the Company to
register shares of the Registrable Stock under Section 2 of this Agreement,
shall terminate two (2) years after the Closing Date, unless such obligations
terminate earlier in accordance with the terms of this Agreement.
5. Lock-up Provision.
(a) The Holder agrees that he will not sell, transfer, assign,
hypothecate or otherwise dispose of any shares of Registrable Stock without the
prior written consent of the Company until the earlier of: (i) with respect to
fifty percent (50%) of the Registrable Stock, six (6) months from and after the
registration statement covering Registrable Stock has been declared effective by
the Commission; and (ii) with respect to all shares of Registrable Stock, twelve
(12) months from and after the registration statement covering Registrable Stock
has been declared effective by the Commission.
(b) Holder agrees that in connection with a registration statement
pursuant to which Holder's Registrable Stock has been registered in an
underwritten offering, the managing underwriter may, by notice to the Holder
under Section 2 effected by either the Company or the managing underwriter,
unilaterally subject the Registrable Stock to a lock-up period not to exceed the
lesser of (i) the lock-up period imposed on any affiliate of the Company and
(ii) the lock-up period imposed on any non-employee, non-director shareholders
of the Company, pursuant to which the Holder may not sell the Registrable Stock
during such lock-up period; and, in such event, Holder hereby agrees to such
lock-up. Any such lock-up period may be further shortened, in the sole
discretion of the managing underwriter.
6. Expenses. All expenses incurred by the Company in complying with the
provisions of this Agreement, including, without limitation, all filing fees,
printing expenses, fees and disbursements of Company counsel and independent
public accounts for the Company, fees and expenses (including counsel fees)
incurred in connection with complying with state securities or "blue sky" laws,
fees of the National Association of Securities Dealers, Inc., fees of transfer
agents and registrars and costs of issuance, but excluding any Selling Expenses
and expenses of counsel for any Holder of the Registrable Stock, are called
"Registration Expenses." All underwriting discounts, selling commissions and
underwriter expense reimbursement allowances applicable to the sale of
Registrable Stock, any stock transfer taxes incurred with respect to the sale of
Registrable Stock, as well as all fees and expenses of counsel for any Holder,
are called "Selling Expenses."
The Company will pay all Registration Expenses in connection with each
registration of Registrable Stock pursuant to the provisions of this Agreement.
All Selling Expenses in connection with each such registration statement shall
be borne by the participating Holders in proportion to the number of shares sold
by each, or by such participating Holders other than the Company (except to the
extent the Company shall be a seller) as they may agree.
7. Indemnification. In the event any Registrable Stock are included in a
registration statement pursuant to this Agreement:
(a) Company Indemnity. To the extent permitted by law, the Company
shall indemnify and hold harmless the Holder thereunder, its officers and
directors, each underwriter of such Registrable Stock thereunder and each other
person, if any, who controls such Holder or underwriter within the meaning of
the Securities Act, against any losses, claims, damages, liabilities or expenses
to which they may become subject under the Securities Act or other federal or
state law, insofar as such losses, claims, damages, liabilities, or expenses (or
actions in respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in such
registration statement including any preliminary prospectus or final prospectus
contained therein or any amendments or supplements thereto, (ii) the omission or
alleged omission to state therein a material fact required to be stated therein,
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, and the Company shall reimburse the
Holder, each such underwriter and each such controlling person for any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability, expense or action; provided,
however, that the Company shall not be liable in any such case if and to the
extent that any such loss, claim, damage, liability, expense or action arises
out of or is based upon (i) an untrue statement or alleged untrue statement or
omission or alleged omission so made in conformity with information furnished by
any such Holder, any such underwriter or any such controlling person in writing
specifically for use in such registration statement or prospectus; or (ii) such
Holder's failure to deliver a copy of the final prospectus as then amended or
supplemented after the Company has furnished such Holder with a sufficient
number of copies of the same, but only if delivery of same is required by law
and the same would have cured the defect giving rise to any such loss, claim,
damage, liability, expense or action.
(b) Holder Indemnity. In the event of a registration of any of
Holder's Registrable Stock under the Securities Act pursuant to the provisions
of this Agreement, Holder shall furnish to the Company in writing such
information and affidavits with respect to such Holder as the Company reasonably
requests for use in connection with any such registration statement (or
prospectus contained therein) and Holder will indemnify and hold harmless to the
extent permitted by law, the Company, each person, if any, who controls the
Company within the meaning of the Securities Act, each officer of the Company
who signs the registration statement, each director of the Company, each
underwriter and each person who controls any underwriter within the meaning of
the Securities Act, against all losses, claims, damages, liabilities or expenses
to which the Company or such officer, director, underwriter or
controlling person may become subject under the Securities Act or other-wise,
insofar as such losses, claims, damages, liabilities or expenses (or actions in
respect thereof) arise out of or are based upon any statements or information
provided by Holder to the Company or underwriter in connection with the offer
and sale of Registrable Stock.
(c) Notice; Right to Defend. Any person entitled to
indemnification hereunder agrees to give prompt written notice to the
indemnifying party after the receipt by such person of any written notice of the
commencement of any action, suit, proceeding or investigation or threat thereof
made in writing for which such person will claim indemnification or contribution
pursuant to this Agreement and, unless in the reasonable judgment of such
indemnified party a conflict of interest may exist between such indemnified
party and the indemnifying party, shall permit the indemnifying party to assume
the defense of such claim with counsel reasonably satisfactory to such
indemnified party. If the indemnifying party is not entitled to, or elects not
to, assume the defense of a claim, it will not be obligated to pay the fees and
expenses of more than one counsel for the indemnified party with respect to such
claim. The indemnifying party will not be subject to any liability for any
settlement made without its consent. Failure of notice by a seller of
Registrable Stock entitled to indemnification hereunder will not relieve the
Company of its obligations under this Section 7 unless the Company is actually
prejudiced thereby.
(d) Contribution. If the indemnification provided for in this
Agreement is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, liability, claim, damage or expense
referred to therein, then the indemnifying party, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such loss, liability, claim, damage or
expense in such proportion as is appropriate to reflect the relative fault of
the indemnifying party on the one hand and of the indemnified party on the other
hand in connection with the statements or omissions which resulted in such loss,
liability, claim, damage or expense as well as any other relevant equitable
considerations. The relevant fault of the indemnifying party and the indemnified
party shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission to state a
material fact relates to information supplied by the indemnifying party or by
the indemnified party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
Notwithstanding the foregoing, the amount the Holder shall be obligated to
contribute pursuant to the Agreement shall be limited to an amount equal to the
proceeds to the Holder of the Registrable Stock sold pursuant to the
registration statement which gives rise to such obligation to contribute (less
the aggregate amount of any damages which the Holder has otherwise been required
to pay in respect of such loss, claim, damage, liability or action or any
substantially similar loss, claim, damage, liability or action arising from the
sale of such Registrable Stock).
(e) Survival of Indemnity, The indemnification provided by this
Agreement shall be a continuing right to indemnification and shall survive the
registration and sale of any Registrable Stock by any person entitled to
indemnification hereunder and the expiration or termination of this Agreement.
8. Rule 144 Reporting. The Company covenants that it will use its best
efforts to timely file the reports required to be filed by it under the Exchange
Act and the rules and regulations adopted by the Commission thereunder to enable
Holder to sell Registrable Stock without registration under the Act within the
limitation of the exemptions provided by (i) Rule 144 under the Act, as such
Rule may be amended from time to time, or (ii) any similar rule or regulation
hereafter adopted by the Commission.
9. Assignment of Registration Rights. The rights of the Holder under this
Agreement, including the rights to cause the Company to register Registrable
Stock may not be assigned without the written prior
consent of the Company. In the event of any transfer, the transfer will only be
permitted if the transferee agrees to be bound by the provisions of this
Agreement.
10. Notices.
(a) All communications under this Agreement shall be in writing
and shall be mailed by certified mail return receipt requested, postage prepaid,
or telegraphed or telexed with confirmation of receipt or delivered by hand or
by overnight delivery service,
(i) If to the Company, at:
Summit Brokerage Services, Inc.
000 Xxxxx Xxxxxxx Xxxxxxx
Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000
Attn: Xxxxxxxx X. Xxxxx, Chief Executive Officer
or at such other address as it may have furnished in writing to the Holder of
Registrable Stock at the time outstanding, or
(ii) if to the Holder of any Registrable Stock, to the
address of such Holder as it appears in the stock ledger of the Company.
(b) Any notice so addressed, when mailed by certified mail return
receipt requested shall be deemed to be given three days after so mailed, when
telegraphed or telexed shall be deemed to be given when transmitted, or when
delivered by hand or overnight delivery service shall be deemed to be given when
delivered.
11. Successors and Assigns. Except as otherwise expressly provided herein,
this Agreement shall inure to the benefit of and be binding upon the successors
and permitted assigns of the Company and the Holder.
12. Amendment, Waiver and Termination. This Agreement may be amended, and
the observance of any term of this Agreement may be waived, but only with the
written consent of the Company and the Holder.
13. Counterparts. One or more counterparts of this Agreement may be signed
by the parties, each of which shall be an original but all of which together
shall constitute one and the same instrument.
14. Governing Law. This Agreement shall be construed in accordance with and
governed by the internal laws of the State of Florida, without giving effect to
conflicts of law principles.
15. Invalidity of Provisions. If any provision of this Agreement is or
becomes invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein shall not be
affected thereby.
16. Headings. The headings in this Agreement are for convenience of
reference only and shall not be deemed to alter or affect the meaning or
interpretation of any provisions hereof.
17. Entire Agreement. This Agreement expresses the entire understanding of
the company and the Holder with respect to the subject matter hereof and
supersedes all prior and contemporaneous agreements and undertakings of the
Company and the Holder with respect to the subject matter hereof.
IN WITNESS WHEREOF, the undersigned have executed this Agreement
effective as of the date executed by the Company below.
SUMMIT BROKERAGE SERVICES, INC. HOLDER
By:
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By:
Name: -----------------------------------
------------------------------- Signature of Holder
Position:
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Date: __________________, 200_
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Print Name of Holder
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Print Address of Holder
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Date
