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EXHIBIT 10.2
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Registration Rights
Agreement") is made as of June 30, 2000, by and between Pinnacle Global Group,
Inc., a Texas corporation (the"Company"), and Arnold J. Barton, Richard D.
Grimes, Jack D. Seibald, Allison Weiss, Deborah Weiss, Neil Lauro, and John
Conlon ("Shareholders").
WHEREAS, on the date hereof, the Company, the Shareholders (as the
former shareholders of Blackford Securities Corporation), Sanders Morris Harris,
Inc. ("SMH"), and Blackford Securities Corporation ("BSC") have entered into
that certain Merger Agreement pursuant to which BSC was merged with and into
SMH, and by virtue of such merger, the Company became the owner of all of the
outstanding capital stock of BSC, and the Shareholders received, in partial
consideration for their shares in BSC, an aggregate of 1,000,000 shares of
Common Stock, $.01 par value, of the Company (the "Shares");
WHEREAS, the consummation of the Merger Agreement was conditioned upon
the parties entering into this Agreement, pursuant to which the Shareholders
agree not to sell the Shares until after June 30, 2001, and pursuant to which
the Company agrees, to grant certain registration rights with respect to the
Shares, not to be effective, however, until after June 30, 2001;
NOW, THEREFORE, in consideration of the mutual promises and covenants
set forth herein, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms shall have the meanings
set forth below:
"COMMISSION" shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
"REGISTRABLE SECURITIES" shall mean (i) the Shares; and (ii) any Common
Stock issued or issuable at any time or from time to time in respect of the
Shares upon a conversion stock split, stock dividend, recapitalization or other
similar event involving the Company.
The terms "REGISTER", "REGISTERED," and "REGISTRATION" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering by the
Commission of the effectiveness of such registration statement.
"REGISTRATION EXPENSES" shall mean all expenses, other than Selling
Expenses (as defined below), incurred by the Company in complying with this
Registration Rights Agreement, including, without limitation, all registration,
qualification and filing fees, exchange listing fees, printing expenses, escrow
fees, fees and disbursements of counsel for the Company, blue sky fees and
expenses, the expense of any special
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audits incident to or required by any such registration (but excluding the
compensation of regular employees of the Company which shall be paid in any
event by the Company).
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended, or
any similar federal statute and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"SELLING EXPENSES" shall mean all underwriting discounts, selling
commissions and stock transfer taxes applicable to the securities registered by
the holders of the Registrable Securities and, except as set forth above, all
fees and disbursements of counsel for such holders.
"SHAREHOLDERS" shall mean Arnold J. Barton, Richard D. Grimes, Jack D.
Seibald, Allison Weiss, Deborah Weiss, Neil Lauro, and John Conlon.
"UNDERWRITTEN PUBLIC OFFERING" shall mean a public offering in which
the Common Stock is offered and sold on a firm commitment basis through one or
more underwriters, all pursuant to (i) an effective registration statement under
the Securities Act and (ii) an underwriting agreement between the Company and
such underwriters.
ARTICLE II
LOCK-UP AGREEMENT
2.1 LOCK-UP. Each of the Shareholders hereby covenant and agree, upon
behalf of themselves and their heirs, that from the date hereof through June 30,
2001, each such Shareholder shall not, directly or indirectly, sell, convey,
pledge, transfer, or assign any of the Shares.
ARTICLE III
REGISTRATION RIGHTS
3.1 PIGGYBACK REGISTRATION.
3.1.1 Subject to the terms hereof, if at any time or from time
to time (but in no event before June 30, 2001) the Company shall
determine to register any of its securities (except for registration
statements relating to employee benefit plans or exchange offers),
either for its own account or the account of a security holder, the
Company will promptly give to the holders of Registrable Securities
written notice thereof no less the 30 days prior to the filing of any
registration statement; and include in such registration (and any
related qualification under blue sky laws or other compliance), and in
the underwriting involved therein, if any, such Registrable Securities
as such holders may request in a writing delivered to the Company
within 20 days after the holders' receipt of Company's written notice.
3.1.2 The holders of Registrable Securities may participate in
any number of registrations until all of the Shares held by holders of
Registrable Securities have been registered or until the Shares are
transferable without restriction pursuant to Rule 144 under the
Securities Act.
3.1.3 If any registration statement is an Underwritten Public
Offering, the right of holders of Registrable Securities to
registration pursuant to this Section shall be conditioned upon each
such
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holder's participation in such reasonable underwriting arrangements as
the Company shall make regarding the offering, and the inclusion of
Registrable Securities in the underwriting shall be limited to the
extent provided herein. Holders of Registrable Securities and all other
shareholders proposing to distribute their securities through such
underwriting shall (together with the Company and the other holders
distributing their securities through such underwriting) enter into an
underwriting agreement in customary form with the managing underwriter
selected for such underwriting by the Company. Notwithstanding any
other provision of this Section, if the managing underwriter concludes
in its reasonable judgment that the number of shares to be registered
for selling shareholders (including the holders of Registrable
Securities) would materially adversely effect such offering, the number
of Shares to be registered, together with the number of shares of
Common Stock or other securities held by other shareholders proposed to
be registered in such offering, shall be reduced on a pro rata basis
based on the number of Shares proposed to be sold by the holders of
Registrable Securities as compared to the number of shares proposed to
be sold by all shareholders. If any holder of Registrable Securities
disapproves of the terms of any such underwriting, it may elect to
withdraw therefrom by written notice to the Company and the managing
underwriter, delivered not less than 10 days before the effective date.
The Registrable Securities excluded by the managing underwriter or
withdrawn from such underwriting shall be withdrawn from such
registration, and shall not be transferred in a public distribution
prior to 120 days after the effective date of the registration
statement relating thereto, or such other shorter period of time as the
underwriters may require.
3.1.4 The Company shall have the right to terminate or
withdraw any registration initiated by it under this Section prior to
the effectiveness of such registration whether or not the holders of
Registrable Securities have elected to include securities in such
registration.
3.2 EXPENSES OF REGISTRATION. All Registration Expenses shall be borne
by the Company. Unless otherwise stated herein, all Selling Expenses relating to
securities registered on behalf of the holders of Registrable Securities shall
be borne by the holders of Registrable Securities.
3.3 REGISTRATION PROCEDURES. In the case of each registration,
qualification or compliance effected by the Company pursuant to this
Registration Rights Agreement, the Company will keep the holders of Registrable
Securities advised in writing as to the initiation of each registration,
qualification and compliance and as to the completion thereof. At its expense,
the Company will:
3.3.1 Prepare and file with the Commission a registration
statement with respect to such securities and use its commercially
reasonable efforts to cause such registration statement to become and
remain effective until the distribution described in such registration
statement has been completed;
3.3.2 Furnish to each underwriter such number of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as such
underwriter may reasonably request in order to facilitate the public
sale of the shares by such underwriter, and promptly furnish to each
underwriter and the holders of Registrable Securities notice of any
stop-order or similar notice issued by the Commission or any state
agency charged with the regulation of securities, and notice of any
Nasdaq or securities exchange listing; and
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3.3.3 Cause the Shares to be listed on the Nasdaq National
Market System or a securities exchange on which the Common Stock is
approved for listing.
3.4 INDEMNIFICATION.
3.4.1 To the extent permitted by law, the Company will
indemnify each holder of Registrable Securities, each of its officers
and directors and partners, and each person controlling such holder
within the meaning of Section 15 of the Securities Act, with respect to
which registration, qualification or compliance has been effected
pursuant to this Agreement, and each underwriter, if any, and each
person who controls any underwriter within the meaning of Section 15 of
the Securities Act, against all expenses, claims, losses, damages or
liabilities (or actions in respect thereof), including any of the
foregoing incurred in settlement of any litigation, commenced or
threatened, to the extent such expenses, claims, losses, damages or
liabilities arise out of or are based on any untrue statement (or
alleged untrue statement) of a material fact contained in any
registration statement, prospectus, offering circular or other similar
document, or any amendment or supplement thereto, incident to any such
registration, qualification or compliance, or based on any 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 in which they were made, not misleading, or any
violation by the Company of the Securities Act or any rule or
regulation promulgated under the Securities Act applicable to the
Company in connection with any such registration, qualification or
compliance, and the Company will reimburse each holder of Registrable
Securities, each of its officers and directors and partners, and each
person controlling each holder of Registrable Securities, each such
underwriter and each person who controls any such underwriter, for any
legal and any other expenses reasonably incurred in connection with
investigating, preparing or defending any such claim, loss, damage,
liability or action; provided, however, that the indemnity contained
herein shall not apply to amounts paid in settlement of any claim,
loss, damage, liability or expense if settlement is effected without
the consent of the Company (which consent shall not unreasonably be
withheld); provided, further, that the Company will not be liable in
any such case to the extent that any such claim, loss, damage,
liability or expense arises out of or is based on any untrue statement
or omission or alleged untrue statement or omission, made in reliance
upon and in conformity with written information furnished to the
Company by a holder of Registrable Securities, such controlling person
or such underwriter specifically for use therein; provided, however,
that the indemnity contained herein shall not apply to amounts paid in
settlement of any claim, loss, damage, liability, or expense if
settlement is effected without the consent of such holder of
Registrable Securities (which consent shall not be unreasonably
withheld). Notwithstanding the foregoing, insofar as the foregoing
indemnity relates to any such untrue statement (or alleged untrue
statement) or omission (or alleged omission) made in the preliminary
prospectus but eliminated or remedied in the amended prospectus on file
with the Commission at the time the registration statement becomes
effective or in the final prospectus filed with the Commission pursuant
to the applicable rules of the Commission or in any supplement or
addendum thereto, the indemnity agreement herein shall not inure to the
benefit of any underwriter if a copy of the final prospectus filed
pursuant to such rules, together with all supplements and addenda
thereto, was not furnished to the person or entity asserting the loss,
liability, claim or damage at or prior to the time such furnishing is
required by the Securities Act.
3.4.2 To the extent permitted by law, each holder of
Registrable Securities will, if securities held by such holder are
included in the securities as to which such registration, qualification
or compliance is being effected pursuant to terms hereof, indemnify the
Company, each
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of its directors and officers, each underwriter, if any, of the
Company's securities covered by such a registration statement, each
person who controls the Company or such underwriter within the meaning
of Section 15 of the Securities Act, and each other person selling the
Company's securities covered by such registration statement, each of
such person's officers and directors and each person controlling such
persons within the meaning of Section 15 of the Securities Act, against
all claims, losses, damages and liabilities (or actions in respect
thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any such registration
statement, prospectus, offering circular or other document, or any
omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, or any violation by a holder of Registrable
Securities of any rule or regulation promulgated under the Securities
Act applicable to holders of Registrable Securities and relating to
action or inaction required of holders of Registrable Securities in
connection with any such registration, qualification or compliance, and
will reimburse the Company, such other persons, such directors,
officers, persons, underwriters or control persons for any legal or
other expenses reasonably incurred in connection with investigating or
defending any such claim, loss, damage, liability or action, in each
case to the extent, but only to the extent, that such untrue statement
(or alleged untrue statement) or omission (or alleged omission) is made
in such registration statement, prospectus, offering circular or other
document in reliance upon and in conformity with written information
furnished to the Company by such holder of Registrable Securities
specifically for use therein; provided, however, that the indemnity
contained herein shall not apply to amounts paid in settlement of any
claim, loss, damage, liability or expense if settlement is effected
without the consent of such holder of Registrable Securities (which
consent shall not be unreasonably withheld). Notwithstanding the
foregoing, the liability of such holder of Registrable Securities under
this subsection (b) shall be limited in an amount equal to the net
proceeds from the sale of the shares sold by such holder of Registrable
Securities, unless such liability arises out of or is based on willful
conduct by such holder of Registrable Securities. In addition, insofar
as the foregoing indemnity relates to any such untrue statement (or
alleged untrue statement) or omission (or alleged omission) made in the
preliminary prospectus but eliminated or remedied in the amended
prospectus on file with the Commission at the time the registration
statement becomes effective or in the final prospectus filed pursuant
to applicable rules of the Commission or in any supplement or addendum
thereto, the indemnity agreement herein shall not inure to the benefit
of the Company or any underwriter, if a copy of the final prospectus
filed pursuant to such rules, together with all supplements and addenda
thereto, was not furnished to the person or entity asserting the loss,
liability, claim or damage at or prior to the time such furnishing is
required by the Securities Act.
3.4.3 Notwithstanding the foregoing paragraphs (a) and (b) of
this Section, each party entitled to indemnification under this Section
(the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which
indemnity may be sought, and shall permit the Indemnifying Party to
assume the defense of any such claim or any litigation resulting
therefrom, provided that counsel for the Indemnifying Party, who shall
conduct the defense of such claim or litigation, shall be approved by
the Indemnified Party (whose approval shall not unreasonably be
withheld), and the Indemnified Party may participate in such defense at
such party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve
the Indemnifying Party of its obligations under this Agreement unless
the failure to give such notice is materially prejudicial to an
Indemnifying Party's ability to defend such action and provided
further, that the Indemnifying Party shall not assume the defense for
matters as to which there is a
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conflict of interest or as to which the Indemnifying Party is asserting
separate or different defenses, which defenses are inconsistent with
the defenses of the Indemnified Party. No Indemnifying Party, in the
defense of any such claim or litigation, shall, except with the consent
of each Indemnified Party, consent to entry of any judgment or enter
into any settlement which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such Indemnified
Party of a release from all liability in respect to such claim or
litigation. No Indemnified Party shall consent to entry of any judgment
or enter into any settlement without the consent of each Indemnifying
Party.
3.4.5 If the indemnification provided for in this Section is
unavailable to an Indemnified Party in respect of any losses, claims,
damages or liabilities referred to therein, then each Indemnifying
Party, in lieu of indemnifying such Indemnified Party, shall contribute
to the amount paid or payable by such Indemnified Party as a result of
such losses, claims, damages or liabilities (i) in such proportion as
is appropriate to reflect the relative benefits received by the Company
on the one hand and all shareholders offering securities in the
offering (the "Selling Security Holders") on the other from the
offering of the Company's securities, or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of
the Company on the one hand and the Selling Security Holders on the
other in connection with the statements or omissions which resulted in
such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative benefits received by
the Company on the one hand and the Selling Security Holders on the
other shall be the net proceeds from the offering (before deducting
expenses) received by the Company on the one hand and the Selling
Security Holders on the other. The relative fault of the Company on the
one hand and the Selling Security Holders on the other shall be
determined by reference to, among other things, whether the untrue or
alleged untrue statement of material fact or the omission or alleged
omission to state a material fact relates to information supplied by
the Company or by the Selling Security Holders and the parties'
relevant intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company and the
Selling Security Holders agree that it would not be just and equitable
if contribution pursuant to this Section were based solely upon the
number of entities from whom contribution was requested or by any other
method of allocation which does not take account of the equitable
considerations referred to above in this Section. The amount paid or
payable by an Indemnified Party as a result of the losses, claims,
damages and liabilities referred to above in this Section shall be
deemed to include any legal or other expenses reasonably incurred by
such Indemnified Party in connection with investigating or defending
any such action or claim, subject to the provisions hereof.
Notwithstanding the provisions of this Section, no Selling Shareholder
shall be required to contribute any amount or make any other payments
under this Agreement which in the aggregate exceed the proceeds
received by such Selling Shareholder. No person guilty of fraudulent
misrepresentation (within the meaning of the Securities Act) shall be
entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
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3.5 CERTAIN INFORMATION.
3.5.1 The holders of Registrable Securities agree, with
respect to any Registrable Securities included in any registration, to
furnish to the Company such information regarding such holder, the
Registrable Securities and the distribution proposed by the such holder
as the Company may reasonably request in writing and as shall be
required in connection with any registration, qualification or
compliance referred to herein.
3.5.2 The failure of the holder of Registrable Securities to
furnish the information requested pursuant to Section 2.7.1 shall not
affect the obligation of the Company to the other Selling Security
Holders who furnish such information unless, in the reasonable opinion
of counsel to the Company or the underwriters, such failure impairs or
may impair the legality of the Registration Statement or the underlying
offering.
3.6 RULE 144 REPORTING. With a view to making available the benefits of
certain rules and regulations of the Commission which may at any time permit the
sale of Restricted Securities (used herein as defined in Rule 144 under the
Securities Act) to the public without registration, the Company agrees to use
its best lawful efforts to:
3.6.1 Make and keep public information available, as those
terms are understood and defined in Rule 144 under the Securities Act,
at all times during which the Company is subject to the reporting
requirements of the Securities Exchange Act of 1934, as amended (the
"Exchange Act");
3.6.2 File with the Commission in a timely manner all reports
and other documents required of the Company under the Securities Act
and the Exchange Act (at all times during which the Company is subject
to such reporting requirements); and
3.6.3 So long as any holder of Registrable Securities owns any
Restricted Securities (as defined in Rule 144 promulgated under the
Securities Act), to furnish to such holder forthwith upon request a
written statement by the Company as to its compliance with the
reporting requirements of said Rule 144 and with regard to the
Securities Act and the Exchange Act (at all times during which the
Company is subject to such reporting requirements), a copy of the most
recent annual or quarterly report of the Company, and such other
reports and documents of the Company and other information in the
possession of or reasonably obtainable by the Company as such holder of
Registrable Securities may reasonably request in availing itself of any
rule or regulation of the Commission allowing such holder to sell any
such securities without registration.
3.7 TRANSFERABILITY. The rights conferred by this Agreement shall be
freely transferable to a recipient of Registrable Securities.
3.8 GOVERNING LAW. This Agreement shall be governed in all respects by
the laws of the State of Texas.
3.9 ENTIRE AGREEMENT; AMENDMENT. This Agreement constitutes the full
and entire understanding and agreement between the parties with regard to the
subject hereof. This Agreement, or any provision hereof, may be amended, waived,
discharged or terminated upon the written consent of the Company and the
Purchaser.
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3.10 NOTICES, ETC. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by registered or
certified mail, postage prepaid, or otherwise delivered by hand or by messenger
including Federal Express or similar courier service, addressed (a) if to the
Shareholders, to: c/o Arnold J. Barton, 1010 Frankline Ave., Suite 303, Garden
City, New York 11530, or at such other address as the Shareholders shall have
furnished to the Company in writing, or (b) if to the Company: to Pinnacle
Global Group, Inc., 5599 San Felipe, Suite 555, Houston, Texas 77056, or at such
other address as the Company shall have furnished to the Purchaser with a copy
to Robert C. Beasley, Ryan & Sudan, L.L.P., 909 Fannin, 39th Floor, Houston,
Texas 77010. Each such notice or other communication shall for all purposes of
this Agreement be treated as effective upon receipt.
3.11 DELAYS OR OMISSIONS. Except as expressly provided herein, no delay
or omission to exercise any right, power or remedy accruing to any party to this
Agreement shall impair any such right, power or remedy of such party nor shall
it be construed to be a waiver of any such breach or default, or an acquiescence
therein, or of or in any similar breach or default thereafter occurring; nor
shall any waiver of any single breach or default be deemed a waiver of any other
breach or default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of any party of any
breach or default under this Agreement, or any waiver on the part of any party
of any provisions or conditions of this agreement, must be in writing and shall
be effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement or by law or otherwise afforded to any
party to this Agreement, shall be cumulative and not alternative.
3.12 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be enforceable against the parties actually
executing such counterparts, and all of which together shall constitute one
instrument.
3.13 SEVERABILITY. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision.
3.14 TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not considered in construing or
interpreting this Agreement.
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THE COMPANY'S SIGNATURE PAGE
IN WITNESS WHEREOF, the Company has executed this agreement effective
upon the date first set forth above.
PINNACLE GLOBAL GROUP, INC.
By: /s/ ROBERT E. GARRISON II
--------------------------------
Name: Robert E. Garrison II
Title: President
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THE SHAREHOLDERS' SIGNATURE PAGE
IN WITNESS WHEREOF, the Shareholders have signed this Agreement as of
the date first written above.
/s/ ARNOLD J. BARTON
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Arnold J. Barton
/s/ RICHARD D. GRIMES
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Richard D. Grimes
/s/ JACK D. SEIBALD
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Jack D. Seibald
/s/ ALLISON WIESS
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Allison Weiss
/s/ DEBORAH WEISS
-------------------------------
Deborah Weiss
/s/ NEIL LAURO
-------------------------------
Neil Lauro
/s/ JOHN CONLON
-------------------------------
John Conlon
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