EXHIBIT 10.10
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "AGREEMENT"), dated as of March
22, 2002, by and between SUMMIT BROKERAGE SERVICES, INC., a Florida corporation
(the "COMPANY"), XXXXXXX XXXXXX, an individual ("XXXXXX") and XXXXXXXX X.
XXXXX, an individual (the "PURCHASER").
WITNESSETH:
WHEREAS, the Company desires to sell to the Purchaser and the
Purchaser desires to purchase from the Company Four Million (4,000,000) shares
of Company's common stock, $.0001 par value per share (the "COMPANY SHARES");
and
WHEREAS, Xxxxxxx Xxxxxx, an affiliate of the Company ("XXXXXX")
borrowed $100,000 from Purchaser ("BRIDGE LOAN") all of which funds were used
by Xxxxxx to acquire from the Company 1,000,000 shares of the Company's common
stock, $.0001 par value (the "XXXXXX SHARES"), which Xxxxxx Shares are pledged
for the Bridge Loan and which Bridge Loan is evidenced by, among other
documents, a promissory note from Xxxxxx in favor of Purchaser, a stock pledge
agreement from Xxxxxx in favor of Purchaser (the "BRIDGE LOAN DOCUMENTS").
WHEREAS, Xxxxxx desires to sell to the Purchaser and the Purchaser
desires to purchase from the Company and Xxxxxx all of the Company Shares and
the Xxxxxx Shares (5,000,000 shares of common stock) (hereinafter collectively
referred to as the "SHARES"), pursuant to the terms hereof.
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. Company and Xxxxxx hereby agree
to sell and transfer to the Purchaser, and the Purchaser hereby agrees to
purchase and accept from Company and Xxxxxx, the Shares at a purchase price of
$0.10 per share, for an aggregate purchase price of Five Hundred Thousand
Dollars and No/100 ($500,000.00) (the "PURCHASE PRICE") for all the Shares.
3. Purchase Price; Transfer of Shares.
(a) Escrow; Closing Date. (a)On the date hereof, the
Purchaser shall deliver to his counsel, Xxxxxxxxxx Xxxxxxxx LLP ("KP"), by wire
transfer or cashier's check, the sum of $400,000.00, (the "ESCROWED FUNDS"),
which funds are to be held in escrow by KP (the "KP ESCROW") pursuant to the
Escrow Agreement (defined below).
(b) On the date hereof, the Company shall instruct its
Transfer Agent to deliver to its counsel, Xxxxxxxxx Xxxxxxx, P.A. ("GT"),
4,000,000 shares of Seller's common stock, $.0001 par value (the "ESCROWED
SHARES"), which shares are to be held in escrow by GT
(the "GT ESCROW") pursuant to the escrow agreement by and among Purchaser,
Company, KP and GT dated of even date herewith (the "ESCROW AGREEMENT").
Purchaser shall not have any rights as an owner of the Escrowed Shares until
the conditions set forth in Section 3(d) below are met, at which time the
closing of the transactions contemplated herein and the release of escrow (the
"CLOSING") shall be held at the offices of Xxxxxxxxx Traurig, P.A., 000 X.
Xxxxxx Xxxxxx, Xxxxxxx, Xxxxxxx at 1:00 p.m., or at such other time and place
upon which the Company and the Purchaser shall agree (the date of the Closing
is hereinafter referred to as the "CLOSING DATE"). At the Closing, Xxxxxx shall
deliver the certificate representing the Xxxxxx Shares and the parties hereto
shall, as applicable, execute and deliver such other documents as required
under Sections 7, 8 and 9 of this Agreement.
(c) At Closing, the Escrowed Funds will be released to
the Company, the Escrowed Shares and the Xxxxxx Shares will be released to
Purchaser and such release of the Escrowed Funds and the Escrowed Shares shall
be governed by, and subject to, the Escrow Agreement.
(d) If the Company shall require from time to time the
use of a portion of the Escrowed Funds, such Escrowed Funds shall be released
to the Company from the KP Escrow (the "RELEASED ESCROW FUNDS") upon written
consent of the Company and the Purchaser, which consent may be withheld in
either party's sole discretion (the "PARTIES CONSENT") and in each such event,
a number of Escrowed Shares shall be released to KP (as counsel for Purchaser)
from the GT Escrow as specified in the Parties Consent, such number of shares
to be derived by dividing $0.10 into the amount of Escrowed Funds requested to
be released (the "RELEASED ESCROW SHARES"). Concurrent with the delivery of the
Parties Consent to KP and GT, Xxxxxx shall execute and deliver to KP for the
benefit of Purchaser amendments to the Bridge Loan Documents increasing the
principal balance of the promissory note and the number of pledged shares of
stock by the amount of the Released Escrow Funds and Released Escrow Shares,
respectively. Any such amounts of Released Escrow Funds and Released Escrow
Shares will decrease the number of Shares to be bought from the Company by
Purchaser and will increase the number of Shares to be bought from Xxxxxx by
Purchaser hereunder (which increased Shares shall be included in the definition
of the "Xxxxxx Shares."
(e) The Closing is conditioned on (i) the Company
receiving approval of the National Association of Securities Dealers, Inc. (the
"NASD") of the change of control of the Company contemplated herein (the "NASD
Approval") and (ii) the Purchaser receiving from the First Union Consent (as
defined in Section 4(o) below. If the NASD Approval and the First Union Consent
are not obtained by May 15, 2002, this Agreement shall terminate and the
parties hereto shall be released from their obligations hereunder, except the
obligations of Purchaser under Section 11 hereof shall survive and Xxxxxx'x
obligations under the Bridge Loan Documents shall survive.
4. Representations and Warranties of Purchaser. The Purchaser
hereby represents, warrants and covenants to the Company that, in connection
herewith:
(a) Review and Evaluation of Information Regarding the
Company. The Purchaser and his agents have had an opportunity to examine the
governing instruments and the material disclosure and other documents and
records of the Company, including without
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limitation, the Company's Form 10-KSB for fiscal 2000, all subsequent reports
on Form 10-QSB, all current reports on Form 8-K filed during 2001, the
Company's proxy statement for its Annual Shareholders' Meeting held in August
2001, the Company's audited financial statements for fiscal 2001, the Company's
unaudited interim profit and loss statement for the two months ended February
28, 2002, and such additional financial and other information as requested by
Purchaser and Purchaser's agents. The Purchaser and his agents have 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 Purchaser and his agents have deemed
necessary to make a fully informed decision. Purchaser and his agents have
conducted such investigations of Company as Purchaser deems appropriate for
Purchaser's investment in the Shares.
(b) Purchaser's Financial Experience. The Purchaser is
sufficiently experienced in financial and business matters to be capable of
evaluating the merits and risks of his investment in the Shares and he has had
substantial experience in previous private and public purchases of securities.
(c) Suitability of Investment. The Purchaser understands
that the Shares are speculative investments and involve a high degree of risk,
including but not limited to: there is no guarantee of success of the business
of the Company; he may not receive any return (economic or otherwise) on his
investment, and management and the majority shareholders of the Company have
extreme latitude and generally, the sole discretion, to determine the financial
picture, operations and potential dissolution of the Company. The Purchaser has
evaluated the merits and risks of the Purchaser's proposed investment in the
Shares, including those risks particular to the Purchaser's personal situation,
and he has determined that this investment is suitable for the Purchaser. The
Purchaser has adequate financial resources for an investment of this character,
and, at this time, the Purchaser could bear a complete loss of his investment.
In addition, Purchaser will continue to have, after making his investment in
the Shares, adequate means of providing for his current needs, the needs of
those dependent on him, and possible personal contingencies. Further, 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 Purchaser has an individual net worth, or joint net
worth with his spouse, that exceeds $1,000,000.
(d) Investment Intent. The Purchaser is purchasing the
Shares for investment purposes only and for his own account, and 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 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 Shares have not been and will not be
registered under the Securities Laws, they cannot be sold unless and until they
are subsequently registered or an exemption from registration is available. The
Purchaser acknowledges and understands that neither the
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Company, nor any representative of the Company, is under any obligation to
register the Shares or the common stock of the Company. The Purchaser
acknowledges and understands that the certificates evidencing the Shares will
bear a restrictive legend to the effect of subsection 4(j) below. The Purchaser
represents that he can afford to hold the Shares for an indefinite period of
time. The Purchaser understands that although the Company's common stock is
quoted over the NASD Electronic Bulletin Board ("OTCBB"), there is not an
active trading market for Company's common stock and that an active trading
market for the 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 Shares may be resold in
certain limited circumstances subject to the provisions of Rule 144, which
requires among other things: (i) the availability of certain public information
about the Company; (ii) the resale occurring not less than one year after the
party has purchased, and made full payment for, within the meaning of Rule 144,
the securities to be sold; and (iii) in the case of an affiliate, 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) and the amount of securities being sold during any three
month period not exceeding the specified limitation therein, if applicable.
(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 his
investment in the 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 Shares. Purchaser
understands and has been advised by 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, 2000, a copy of which has been delivered to and
reviewed by Purchaser.
(i) Authority to Enter into Agreement; No
Disqualification. Subject to NASD Approval and the First Union Consent (defined
below), the Purchaser has the full right, power and authority to execute and
deliver this Agreement and perform his obligations hereunder, and when executed
and delivered, this Agreement will constitute a valid and legally binding
obligation of such Purchaser.
(j) Legends. Each certificate representing the Shares
may be endorsed with the following legends:
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The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the
"Act"), or any state securities laws. The shares may not be
sold, transferred or assigned in the absence of an effective
registration statement for these shares under the Act and
applicable state securities laws or an opinion of counsel
satisfactory to the Corporation that such registration is not
required.
(k) Residence. Purchaser is a resident of the State of
Florida.
(l) NASD Affiliation. Purchaser has served as a
principal of other broker/dealer firms. Purchaser is familiar with the rules of
the National Association of Securities Dealers, Inc. ("NASD") and is in good
standing with the NASD. Further, Purchaser is not subject to any of the
disqualification provisions set forth in 17 C.F.R. 230.252, et. seq.
(m) NASD Approval. Purchaser understands and agrees that
the Purchaser's acquisition of the Shares will be deemed a "change of control"
of the Company requiring the approval of the NASD.
(n) '34 Act Filings. After the Closing Date and in
accordance with the requirements of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") and rules promulgated thereunder, Purchaser shall
complete and cause to be timely filed with the SEC on his behalf a Form 3 and a
Schedule 13D in connection with the securities he will receive hereunder and
his appointment as a director and officer of this Company.
(o) 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 Purchaser under, any note,
mortgage, indenture, deed of trust, lien, lease, agreement, contract, license,
permit or other instrument or restriction to which Purchaser is a party or by
which it or any of its properties or assets may be bound or affected; or (ii)
subject to NASD Approval, result in a material violation of any law, statute,
rule, regulation, instrument, order, judgment or decree to which Purchaser or
any of its properties is subject. Notwithstanding the foregoing, Purchaser is
subject to a non-competition agreement with First Union Securities Financial
Network ("First Union Securities") and Purchaser specifically represents,
warrants and covenants to the Company that he has been advised by First Union
Securities that it will modify the non-competition agreement to permit him to
enter into this Agreement and the transactions contemplated herein ("FIRST
UNION Consent"). In that regard, Purchaser will diligently pursue obtaining
such consent in writing and delivering same to the Company.
5. Representations and Warranties of Company. The Company hereby
represents, warrants and covenants to the Purchaser that, in connection
herewith:
(a) Organization and Standing. Company is a corporation
duly organized and validly existing, and its status is active, under the laws
of the State of Florida. Company has all requisite corporate power and
authority to own and operate its properties and assets, and to carry
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on its business as presently conducted and as currently proposed to be
conducted. Company 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.
(b) Corporate Power. Company has all requisite legal and
corporate power and authority to (i) execute and deliver this Agreement, (ii)
sell and issue the Shares hereunder, and (iii) carry out and perform its
obligations under the terms of this Agreement and the Escrow Agreement and the
transactions contemplated hereby and thereby.
(c) Capitalization. The authorized capital stock of
Company consists of 20,000,000 shares of common stock, par value $.0001 per
share (the "COMMON STOCK"), of which 5,700,064 shares are issued and
outstanding; and, 5,000,000 shares of blank check preferred stock, par value
$.0001 per share, of which 5,000,000 shares have been designated as, Series A
Convertible Preferred Stock ("Series A Preferred Stock"), of which 125,000
shares of Series A Preferred Stock are issued and outstanding. (On or before
the Closing Date, the Company will amend its Articles of Incorporation to
re-designate 4,875,000 Series A Preferred Stock as blank check preferred stock,
leaving a total of 125,000 shares of designated Series A Preferred Stock.) The
Company has reserved 150,000 shares of Common Stock for issuance upon
conversion of the issued and outstanding Series A Convertible Preferred Stock.
Company has also reserved 900,000 shares of Common Stock for issuance of stock
options and other stock awards under its 2000 Incentive Compensation Plan (the
"PLAN"). Non-qualified options to purchase an aggregate of 755,641 shares of
Common Stock pursuant to the Plan are presently outstanding and unexercised,
and the Company has reserved 755,641 shares of Common Stock for issuance upon
exercise of these options. The Company additionally has outstanding
non-qualified options to purchase an aggregate of up to 1,088,478 shares of
Common Stock which are not subject to the Plan, and Company has reserved
1,088,478 shares of Common Stock for issuance upon exercise of these options.
Except as contemplated herein and the exhibits hereto, there are no options,
warrants, conversion rights, preemptive rights, rights of first refusal, or
similar rights presently outstanding to purchase or otherwise acquire from the
Company any of the Company's securities. Immediately after the Closing, the
capitalization of the Company will be as set forth in SCHEDULE 5(C) attached
hereto.
(d) Use of Proceeds. Company intends to use the
$400,000.00 from the sale of the Company Shares substantially the purposes set
forth on SCHEDULE 5(D) attached hereto; provided, however, Company does not
represent that uses of such proceeds will not vary, subject to unforeseen
events. In addition, Company shall not deviate from the use of proceeds for any
item listed on SCHEDULE 5(D) by more than $2,500.00 in excess of the amount
specified therein, without the consent of Mr. Leeds.
(e) Authorization. All corporate action on the part of
the Company, its officers, directors and shareholders necessary for the
authorization, execution, delivery and performance of this Agreement by the
Company, the authorization, sale, issuance (or reservation for issuance) and
delivery of the Shares and the performance of all of the Company's obligations
hereunder have been taken or will be taken prior to the Closing. 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 (i) laws of
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general application relating to bankruptcy, insolvency and the relief of
debtors and rules of law governing specific performance, injunctive relief or
other equitable remedies and (ii) NASD approval of this Agreement.
(f) Valid Issuance of Shares. The 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 Shares will be free
and clear of any liens or encumbrances (except as such derive from Purchaser,
as to which no representation and warranty is made by Company herein);
provided, however, that the Shares may be subject to restrictions on transfer
under applicable state and/or federal securities laws. The 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..
(g) Offering. Subject to the accuracy of the Purchaser's
representations in Schedule 4 hereof, and to its compliance with all applicable
state and federal securities laws relating to its purchase of the Shares, the
offer, sale and issuance of the Shares pursuant to the terms of this Agreement
constitute transactions exempt from the registration requirements of Section 5
of the Securities Act of 1933, as amended (the "SECURITIES ACT"), and Florida
state blue sky laws.
(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 NASD.
(ii) The Company and, to the extent applicable,
its subsidiaries, has filed all Form BDs and Form ADVs (including all
amendments thereto) required to be filed with the Commission, each of which has
complied with the Securities Exchange Act of 1934, as amended (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. The Company has heretofore furnished to
the Purchaser correct and complete copies of such Form BDs and Form ADVs
(including all amendments thereto). None of such Form BDs or Form ADVs
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 amended or superseded by a subsequent filing
with the Commission (a copy of which has been provided to the Company prior to
the date hereof), none of the Form BDs or Form ADVs (including all amendments
thereto) contains any untrue statement of 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. All copies of such Form BDs and Form ADVs (including all
amendments thereto) required to be filed with any state have been filed in a
timely manner.
(iii) Company and, to the extent applicable, its
subsidiaries, has filed all SRO Reports required to be filed with any
self-regulatory organizations since January 1, 1999, each of which has complied
with the rules of the self-regulatory organization, each as in effect
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on the date so filed. Company has heretofore furnished to the Purchaser correct
and complete copies of the SRO Reports. 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
self-regulatory organization (a copy of which has been provided to the
Purchaser prior to the date thereof), 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.
(iv) Company and, to the extent applicable, its
subsidiaries, has registered as a broker-dealer and investment adviser in each
jurisdiction in which such registration has been required since January 1,
1999. Company and, to the extent applicable, its subsidiaries, has 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 since January 1, 1999. All such forms, reports, statements, and
documents are accurate in all material respects.
(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 assets, liabilities or net worth as reported in
Company's Form 10-QSB for the nine months ended September 30, 2001, as
supplemented by the Company's audited financial statements for fiscal 2001 and
as further supplemented by an unaudited interim profit and loss statement for
the two months ended February 28, 2002, nor has there been a material adverse
change in the Company's relationship with its lenders, suppliers, customers,
employees, or its securities clearing firm, whether occurring in the ordinary
course of business or otherwise; provided, however, no representation or
warranty is given with respect to the aftereffects of events occurring on
September 11, 2001 or the affect on the Company of current economic and market
conditions generally.
(j) Tax Matters. The provisions made for Taxes reflected
in the audited balance sheet at December 31, 2001 are sufficient for the
payment of all Taxes of the Company through the date of the Closing. 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) Certain Related Party Obligations. The information
set forth on SCHEDULE 5(K) attached hereto is true, correct and complete as to
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.
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(l) Subsidiaries. Except as set forth in SCHEDULE 5(L)
attached hereto, the Company has no subsidiaries or affiliated companies and
does not otherwise own or control, directly or directly, 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.
(m) Beneficial Equity Ownership of Xxxxxxx Xxxxxx.
Xxxxxxx Xxxxxx'x beneficial equity ownership of the Company is as set forth on
SCHEDULE 5(M) attached hereto.
(n) Litigation. There are no actions, suits, proceedings
or investigations pending or, to the Company's knowledge, threatened, which
would seek to delay or prevent the consummation of the transactions
contemplated herein or which may adversely affect or restrict the Company's
ability to consummate the transactions contemplated herein. Except as set forth
on SCHEDULE 5(N) hereto, no action, suit, proceeding or investigation is
pending, or to the Company's knowledge, threatened, against the Company
affecting or involving the Company's business, and the Company is not subject
to any unsatisfied judgment, order, award, decision, injunction, or ruling
entered, issued, made or rendered by any court, arbitrator or other
governmental authority that would restrict the Company's ability to enter into
this Agreement.
(o) Consents. Other than the NASD Approval, which as of
this date has not been obtained, no consent, approval, qualification, order or
authorization of, or filing with, any governmental authority is required in
connection with the Company's valid execution, delivery or performance of this
Agreement and the transactions contemplated herein, or the offer, sale or
issuance of the Shares by the Company, or the consummation of any other
transaction contemplated on the part of the Company hereby.
(p) No Breach. Subject to NASD Approval, 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 is a party or by which it or any of its properties or assets
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 properties is subject. Notwithstanding the foregoing, the
change of control that will occur upon consummation of this Agreement will
result in the acceleration of the vesting of options for 145,752 shares of
Company common stock as set forth in SCHEDULE 5(P) hereto.
(q) Branch Offices; Licenses. The Company has, in
addition to its home office located in Indialantic, Florida, a total of 54
branch and non-branch locations, of which 33 are NASD registered branches. The
Company has 102 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 24 States. The Company has filed an investment adviser
notice in 20 States.
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(r) Existing Employment Agreements. The only employment
agreements currently existing between the Company and management are agreements
with Xxxxxxx Xxxxxxx dated on or about September 2000 and Xxxxxx Xxxxxxxx dated
December 1, 2000, and letters pertaining to same from each of Xxxxxxx Xxxxxxx
(dated January 25, 2002) and Xxxxxx Xxxxxxxx (dated January 25, 2002) have been
provided to Purchaser.
(s) Permits and Licenses. The Company has all required
permits, licenses, certificates and approvals from all local, state and federal
governmental authorities having jurisdiction over the Company that are material
to the operation of the Company's business and use of its assets.
(t) Compliance with Laws. The Company is in compliance
with all local, state and federal laws, ordinances, rules and regulations
applicable to, and material to, the operation of the Company's business and use
of its assets.
(u) Material Contracts. Except as disclosed in SCHEDULE
5(U) hereto, the Company is not a party to any management, service, supply,
maintenance or other contracts which are material to the operation of the
Company's business or use of its assets.
6. Representations and Warranties of Xxxxxx as to Xxxxxx Shares.
(a) Title to Xxxxxx Shares. Xxxxxx has good, valid and
marketable title to the Xxxxxx Shares, all of which stock has been duly
authorized and validly issued and is fully paid and non-assessable, and is (and
on the Closing Date will be) free and clear of all pledges, liens, claims,
charges, options, calls, encumbrances, restrictions and assessments whatsoever
(except any restrictions which may be created by operation of state or federal
securities laws). Xxxxxx is sole owner of the Xxxxxx Shares.
(b) Validity. Xxxxxx has the full legal right, power and
authority to execute and deliver this Agreement and to consummate the transfer
of the Xxxxxx Shares to Purchaser. Upon execution and delivery by Xxxxxx,
Xxxxxx'x agreement to transfer the Xxxxxx Shares will constitute the valid and
legally binding obligation of Xxxxxx, enforceable in accordance with its terms,
subject to (i) 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 and (ii) NASD approval of this
Agreement.
7. Purchaser's Conditions to Closing.
The Purchaser's obligations to purchase the Shares at the
Closing are subject to the fulfillment on or prior to the Closing Date of the
following conditions:
(a) Representations and Warranties Correct. The
representations and warranties made by the Company in Section 5 hereof shall be
true and correct in all material respects as of the Closing Date with the same
force and effect as if made on such date.
(b) Covenants. All covenants, agreements and conditions
contained in this Agreement to be performed by the Company on or prior to the
Closing Date shall have been performed or complied with.
10
(c) Conditions. The NASD Approval and the First Union
Consent shall have been obtained on or before the Closing Date.
(d) Additional Documents. The following agreements and
documents shall be executed and delivered at Closing:
(i) an employment agreement, signed by the
Company, pursuant to which Purchaser is employed by the Company as its CEO and
Chairman and containing such other terms and conditions in substantially the
form attached hereto as EXHIBIT A (the "LEEDS EMPLOYMENT AGREEMENT");
(ii) a stock option agreement, signed by the
Company, evidencing an option grant to Purchaser (the "LEEDS OPTION") for
7,000,000 shares of the Company's common stock, exercisable at $0.25 per share,
expiring December 31, 2007 (unless otherwise terminated under its terms) and
containing such additional terms and conditions in substantially the form
attached hereto as EXHIBIT B (the "LEEDS OPTION AGREEMENT"); and
(iii) a shareholders voting agreement and
irrevocable proxy, signed by Xxxxxxx Xxxxxx, pursuant to which Xx. Xxxxxx
grants to Purchaser the right to vote (i) all shares of the Company's common
stock owned by Xxxxxxx Xxxxxx individually and as joint tenants with his spouse
(who shall join in the voting agreement as to such jointly held shares), and
(ii) all shares of the Company's common stock that may be issued to Xxxxxxx
Xxxxxx upon exercise of stock options for 904,440 shares he currently holds or
will hold pursuant to this Agreement, which shareholders voting agreement and
irrevocable proxy shall expire on the fifth anniversary of the date of such
agreement or as otherwise provided under the terms the agreement, and shall be
in substantially the form attached hereto as EXHIBIT C (the "VOTING
AGREEMENT").
8. Company's Conditions to Closing. The Company's obligation to
sell and issue the Shares at the Closing is, at the option of the Company,
subject to the fulfillment as of the Closing Date of the following conditions:
(a) Representations. The representations and warranties
made by the Purchaser in Section 4 hereof shall be true and correct in all
material respects as of the Closing Date with the same force and effect as if
made on such date.
(b) Covenants. All covenants, agreements and conditions
contained in this Agreement to be performed by the Purchaser on or prior to the
Closing Date shall have been performed or complied with.
(c) Conditions. The NASD Approval and the First Union
Consent shall have been obtained on or before the Closing Date.
(d) Purchase Price. The Company shall have received, in
addition to the $100,000.00 previously delivered to the Company by the
Purchaser, the balance of the purchase price of $400,000.00 on the Closing
Date.
(e) Employment Agreement. Purchaser shall have executed
and delivered to the Company the Leeds Employment Agreement. and delivered to
the Company the Leeds Employment Agreement.
11
9. Additional Closing Matters. In addition to the agreements and
documents to be delivered at Closing under Sections 5 and 6, above, the
following agreements and documents shall be executed and delivered to their
respective parties at Closing:
(a) Xxxxxx Option Agreements. The Company and Xxxxxxx
Xxxxxx shall execute and deliver stock option agreements evidencing options
granted by the Company in favor of Xxxxxxx Xxxxxx permitting him to purchase
400,000 shares of the Company's common stock at $0.50 per share and 500,000
shares of the Company's common stock at $.10 per share, each expiring on
December 31, 2007 (unless otherwise terminated under their terms), and
containing such additional terms and conditions as substantially set forth in
the form stock option agreements attached hereto as EXHIBIT D-1 and EXHIBIT D-2
(the "XXXXXX OPTION AGREEMENTS").
(b) Xxxxxx Employment Agreement. The Company and Xxxxxxx
Xxxxxx shall execute and deliver an employment agreement substantially in the
form attached hereto as "EXHIBIT E" ("XXXXXX EMPLOYMENT AGREEMENT").
(c) Company Lease. The current lease of the Company's
headquarters located at 00 Xxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxx 00000
("Headquarters') between the Company as lessee and First America Living Trust,
Inc. as landlord shall be terminated and replaced at Closing with a new lease
for 85% of the Headquarters space, with lease terms structured so as to
reimburse the landlord only for its costs associated with the building
ownership without any markup or profit, which new lease shall be in
substantially the form attached hereto as "EXHIBIT F" (the "MASTER LEASE")
(d) ESA Lease. A lease between Educational Seminars of
America, Inc. ("ESA") as lessee and First America Living Trust, Inc., as
landlord for 15% of the Headquarters space, with lease terms structured the
same as for the Company Lease, which ESA lease shall be in substantially the
form attached hereto "EXHIBIT G" (the "ESA LEASE").
(e) Cancellation and Delivery of Bridge Loan Documents.
Purchaser shall cancel and deliver to Xxxxxx at Closing the Bridge Loan
Documents, including but not limited to the Bridge Promissory Note and Pledge
Agreement.
(f) Board Resolutions. The Company shall deliver a copy
of resolutions adopted by the Company's Board of Directors effective as of the
Closing Date and certified by the Secretary of the Company: (A) approving this
Agreement and the transactions contemplated herein, (B) approving the Leeds and
Xxxxxx Employment Agreements; (C) granting the Leeds Option and Xxxxxx Options
and approving the Leeds and Xxxxxx Option Agreements, (D) approving the Voting
Agreement; (E) approving the Summit Lease and ESA Lease; (F) adjusting the size
of the Board of Directors to five (5) members, (G) accepting the resignations
of two directors; (H) appointing Purchaser and two of Purchaser's
representatives to the Company's Board of Directors, and (I) electing Purchaser
as the Chairman and Chief Executive Officer of the Company.
12
10. Additional Agreements of the Parties.
(a) D&O Insurance: The Company shall obtain a minimum of
$1,000,000 of Directors' and Officers' ("D&O") liability insurance coverage for
its directors and executive officers as soon as possible after the Closing.
(b) Diligence in Obtaining Consents. The Company and
Purchaser shall work diligently toward obtaining the NASD Approval and the
First Union Consent.
(c) No Material Adverse Change. From the date of this
Agreement until the earlier of the Closing Date or the termination of this
Agreement, Company will:
(i) operate its business only in the "ordinary
course" in the same manner as it has been conducted in the recent past, which
would include no change in Company's securities clearing firm relationship;
(ii) purchase no capital equipment or other
capital items with a price greater than $1,000 individually or $2,000 in the
aggregate without the prior approval of Purchaser;
(iii) not sell, encumber, or otherwise remove any
of the assets of the Company other than in the ordinary course of its business.
(iv) not increase salaries, pay bonuses, pay
dividends, pay shareholder distributions, make either interest or principal
payments on shareholder or related party notes or loans, or otherwise withdraw
funds from the business other than in the ordinary course;
(v) sell or issue any shares or other equity
securities of the Company, except shares that might be purchased as the result
of an exercise of any options outstanding on the date of this Agreement; and
(vi) take no actions which might be materially
adverse to the interests of the Company, its business, Purchaser, or the
transactions contemplated herein
11. Confidentiality. Purchaser agrees that (except as may be
required by law) he will not disclose or use and he will cause his agents,
employees, representatives and advisers (the "PURCHASER'S AGENTS") not to
disclose 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 Purchaser or Purchaser's Agents in
connection herewith at any time or in any manner and will not use such
information other than in connection with his evaluation of the transactions
contemplated herein. For the purposes of this Section 11, "Confidential
Information" means the Company business plans, customer lists, methods of
operation, employee and independent contractor information, and any other
information identified as confidential in writing to Purchaser or Purchaser's
Agents by the Company. If the Closing is not consummated, Purchaser and
Purchaser's Agents will promptly return all Company's documents, contracts,
records, or properties and any copies thereof, to Company. Notwithstanding the
foregoing, any such Confidential Information may be disclosed: (a) to
Purchaser's employees, representatives, agents and advisers who need to know
such information
13
for the purpose of evaluating the transactions contemplated herein; (b) if the
Company consents to such disclosure in writing; or (c) the information becomes
public knowledge through no fault of Purchaser; or (d) if required by law.
12. Indemnification.
(a) The Company shall indemnify the Purchaser and hold
him harmless, upon demand, from and against any losses, damages, expenses or
liabilities, including without limitation reasonable attorneys' fees and
expenses (individually and collective defined in this Section 12 as "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.
(b) Xxxxxx shall indemnify the Purchaser and hold him
harmless upon demand, from and against any Losses which the Purchaser may
sustain, suffer or incur arising from or in connection with his material breach
of any covenant, representation, warranty, agreement, obligation or undertaking
of Xxxxxx hereunder.
(c) The Purchaser shall indemnify the Company and Xxxxxx
and hold them harmless, upon demand, from and against any Losses which the
Company or Xxxxxx 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 Purchaser hereunder.
(d) A party hereunder shall have no liability under this
Agreement to indemnify under either Section 12(a), Section 12(b) or Section
12(c) 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") on or before the two-year
anniversary of the Closing Date, or, (i) with respect to Losses relating to a
breach of any warranties under Section 5(j) above, the expiration of the final
statute of limitations for the those tax returns to which the Taxes reflected
in the audited balance sheet for December 31, 2001 relate; and (ii) with
respect to the warranties under Sections 4(i), (5(a), 5(b), 5(c), 5(e), 5(f),
6(a) and 6(b) above, such warranties shall survive Closing indefinitely.
Notwithstanding the foregoing, no party hereto shall seek indemnification from
another party for failure to obtain the First Union Consent or the NASD
Approval. Further, the Company and shall hold Purchaser harmless with respect
to such failure to obtain the First Union Consent or the NASD approval.
(e) All 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 12(d) 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
14
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. 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.
13. Publicity. The Company is subject to the public disclosure
requirements of the Exchange Act of 1934, as amended, and the rules promulgated
thereunder. With respect to this Agreement and the transactions contemplated
hereby, 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 either federal or state securities laws or regulations.
However, in no event shall Purchaser release any information to the public
regarding this Agreement or the transactions contemplated herein without the
prior written consent of the Company.
14. Governing Law; Jurisdiction. This Agreement will be governed
by, construed and enforced in accordance with the laws of the State of Florida.
15. 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.
16. 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, 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 14.
If to Purchaser: Xxxxxxxx X. Xxxxx
0000 Xxxxxxxxx Xxxx
Xxxx Xxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
15
With copy to: W. Xxxxx Xxxxx, Esq.
Xxxxxxxxxx Xxxxxxxx LLC
0000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
If to Company: Summit Brokerage Services, Inc.
00 Xxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxx 00000
Attn: Xxxxxxx Xxxxxx, Chairman
Facsimile: (000) 000-0000
With copy to: Xxxxxx X. Xxxxxx, Esq.
Xxxxxxxxx Xxxxxxx, P.A.
000 X. Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
17. 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 successive as well
immediate successors to and assigns of said parties).
18. 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.
19. 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.
20. 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.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and the year first set forth above.
COMPANY:
SUMMIT BROKERAGE SERVICES, INC.,
a Florida corporation
By: /s/ Xxxxxxx Xxxxxx
----------------------------------------
Xxxxxxx Xxxxxx, Chairman and
Chief Executive Officer
PURCHASER:
/s/ Xxxxxxxx X. Xxxxx
-------------------------------------------
Xxxxxxxx X. Xxxxx
16
SCHEDULE 5(C)
CAPITALIZATION POST-CLOSING
The following will be the capitalization of Company upon the closing of the
sale of the Shares:
The authorized capital stock of Company consists of 20,000,000 shares of common
stock, par value $.0001 per share (the "COMMON STOCK"), of which 9,700,064
shares are issued and outstanding; and, 4,875,000 shares of blank check
preferred stock, par value $.0001 per share, of which 125,000 shares have been
designated as, and are issued and outstanding as, Series A Convertible
Preferred Stock. Company has reserved 150,000 shares of Common Stock for
issuance upon conversion of the issued and outstanding Series A Convertible
Preferred Stock. Company has also reserved 900,000 shares of Common Stock for
issuance of stock options and other stock awards under its 2000 Incentive
Compensation Plan (the "PLAN"). Non-qualified options to purchase an aggregate
of 755,641 shares of Common Stock pursuant to the Plan are presently
outstanding and unexercised, and the Company has reserved 755,641 shares of
Common Stock for issuance upon exercise of these options. The Company
additionally has outstanding non-qualified options to purchase an aggregate of
up to 1,008,478 shares of Common Stock which are not subject to the Plan, and
Company has reserved 1,008,478 shares of Common Stock for issuance upon
exercise of these options. In addition, the Company has reserved 7,900,000
shares of Common Stock for non-qualified stock options pursuant to the Stock
Purchase Agreement. Except as contemplated herein, there are no options,
warrants, conversion rights, preemptive rights, rights of first refusal, or
similar rights presently outstanding to purchase or otherwise acquire from the
Company any of the Company's securities.
17
SCHEDULE 5(D) - CONTINUED
USE OF PROCEEDS - CLOSING
Proceeds (Balance of purchase price) $400,000.00
Uses:
Additional Salaries $48,000
Accounts Payable $65,000
Dividends - Preferred Stock $15,000
Legal fees(1) $70,000
D&O Insurance renewal(2) $20,000
Monthly Business Expansion(3) $40,000
Working Capital $72,000
Reserve for increase net capital $70,000
-------
$400,000.00
---------
(1) Xxxxxxxxx Traurig, P.A. - to be paid on account for Leeds transaction
and existing accounts receivable
(2) Monthly payments for four months on D&O Ins. renewal
(3) Burn rate of $10,000 per month for four months
18
SCHEDULE 5(K)
RELATED PARTY OBLIGATIONS
(PAYABLES TO OR RECEIVABLES FROM AFFILIATES)
OWED TO: $ AMOUNT
Summit Group of Companies, Inc. $40,000.00 Non-cash obligaton (WalMart
common stock)
Xxxxxxx Xxxxxx $12,500.00 Balance of Advance to Company
(to be repaid in monthly installments
over six months)
Xxxxxxx Xxxxxx $ 6,024.99 Commissions Due
OWED FROM:
Summit Group of Companies, Inc. $14,982.92 Balance from transfer of
office Furniture, etc. (when management
company relationship was terminated).
19
SCHEDULE 5(L)
SUBSIDIARIES
1. SBS Insurance Agency of Florida, Inc.
2. SBS of California Insurance Agency, Inc.
3. Summit Financial Group, Inc.
4. Summit Holding Group, Inc.
20
SCHEDULE 5(M)
BENEFICIAL OWNERSHIP OF XXXXXXX XXXXXX
(AS OF 03/22/02; PRIOR TO CLOSING)
A. COMMON STOCK
3,743,920 Solely and directly by Xxxxxxx
45,000 As Trustee of two foundations and one charitable
remainder trust
497,675 Jointly with Wife
27,000 Solely and directly by Wife
4,313,595 TOTAL
B. OPTIONS
549,170 Solely and directly by Xxxxxxx
160,000 Solely and directly by Wife
-------
709,170
C. COMMON STOCK AND OPTIONS
5,022,765, which is approximately 80% beneficial ownership of the
outstanding.
21
SCHEDULE 5(N)
LITIGATION/OTHER PROCEEDINGS
1. On March 6, 2002, the Company learned that it had not meet
its net capital requirements on December 31, 2001 and in respect thereof, the
Company contacted the NASD and will be filing by March 26, 2002, with the NASD
an amended FOCUS report for the quarter ended December 31, 2001. In connection
with the forgoing, the Company expects its outside auditing firm to conduct its
normal quarterly review at the Company's offices in April, 2002 to review the
Company's records.
2. CURRENT LITIGATION: The following NASD arbitrations are
currently pending against the Company:
X. Xxxx v. Summit Brokerage Services, Inc., NASD Case
No. 01-0229
X. Xxxxxxxx v. Summit Brokerage Services, Inc., NASD
Case No. 01-03640
Purchaser acknowledges that the Company has disclosed to Purchaser,
and Purchaser has reviewed, summaries and actual documents relating to these
arbitrations.
3. THREATENED LITIGATION: The following customer(s) have
submitted a written complaint which the Company has reason to believe may
result in litigation, but no action has been taken by the customer as of the
date of this agreement: Xxxxx Xxxxx.
Purchaser acknowledges that the Company has disclosed to Purchaser,
and Purchaser has reviewed, summaries and actual documents relating to these
complaint(s).
4. PAST ACTIONS WHICH MAY RESTRICT THE COMPANY'S ABILITY TO DO
BUSINESS: As a result of Consent Order No. 09-11-S entered by the Arkansas
Securities Division in 1999, the Company may not open new branch offices,
solicit new customers or open new accounts, or conduct options activities in
Arkansas or with Arkansas customers until that portion of the order expires on
April 30, 2002.
Purchaser acknowledges that the Company has disclosed to Purchaser,
and Purchaser has reviewed, summaries and the actual Consent Order in this
administrative case.
22
SCHEDULE 5(P)
ACCELERATED OPTION VESTING
CUMULATIVE EXERCISE
1999 2000 TOTAL PRICE*
---- ---- ---------- --------
Xxxx Xxxxxx 686 1,624 2,310
Xxxx Xxxxxx 925 790 1,715
Xxx Xxxxxxxxx 3,790 3,903 7,693
Xxx Xxxxxxx 1,511 1,161 2,672
Xxxx Xxxxxx 1,005 -- 1,005
Xxx Suits 694 -- 694
Xxx Xxxxx 1,262 -- 1,262
Xxxxxxx Xxxxxx 7,200 8,000 15,200
Xxxxxx Xxxxxxxxxx 1,800 2,000 3,800
Xxxx Xxxxxx 18,000 20,000 38,000
XxXxx Xxxxxxx 1,800 2,000 3,800
Xxxx Xxxxxx 18,000 20,000 38,000
Xxxxx Xxxxxxx 9,800 10,000 19,800
Xxxxx XxXxxxxxx 1,800 10,000 11,800
TOTAL ACCELERATED OPTIONS 145,752
* All of the foregoing options have exercise prices of $2.50 per share.
23
SCHEDULE 5(U)
MATERIAL CONTRACTS
TECHMATE Software rental monthly - WinOps
Florida Copy Copier maintenance
Atlantic Business Copier lease/maint
Panthus Computer lease
Advantage leasing Furniture and equipment lease
GE Capital Furniture and equipment lease
Jaguar Finance Auto Lease
CQG Stock quotes
Private Mini Storage Storage space
Xxxx South Yellow pages advertising
FAST Stock transfer agent
Health First Group health insurance plan - staff
Allied National Ins. Group dental plan
AFLAC Group supplemental ins. Plan
Blue Cross Group health insurance plan - reps
First Insurance Funding Finance agreement - E & O policy
Dain Correspondent Services Clearing firm
First Clearing Corp. Clearing firm
24
EXHIBIT A
[LEEDS EMPLOYMENT AGREEMENT}
EXHIBIT B
[LEEDS OPTION AGREEMENT]
EXHIBIT C
[VOTING AGREEMENT]
EXHIBIT D-1
[XXXXXX OPTION AGREEMENT]
EXHIBIT D-2
[XXXXXX OPTION AGREEMENT]
EXHIBIT E
[XXXXXX EMPLOYMENT AGREEMENT]
EXHIBIT F
[SUMMIT LEASE]
EXHIBIT G
[ESA LEASE]
25
