10.41
BRANCH AGREEMENT AND
AMENDMENT TO IC AGREEMENT
THIS AGREEMENT made as of this ___ day of January, 2003 by and among
vFinance Investments, Inc. (the "Company") with principal offices located at
0000 X. Xxxxxxxx Xxxxx, Xxxxx 000, Xxxx Xxxxx, XX 00000; JSM Capital Holding
Corp, ("JSM") a Delaware Corporation with principal offices located at 000
Xxxxxxx Xxx, Xxx Xxxx, X. Y. 10022; and Xxxx X. Xxxxxxxx (the "Independent
Contractor"), an individual located at the same address as JSM.
WITNESSETH:
WHEREAS, the Company and the Independent Contactor entered into that certain
independent contractor agreement dated as of December 19, 2002 (the "IC
Agreement") under which, the existing retail brokerage operations owned by JSM
are to be managed by the Independent Contractor for the benefit of JSM as an
independent contractor office of the Company; and
WHEREAS, the Company maintains its own retail brokerage operations, including
certain assets and liabilities associated therewith, ("Branch Operations") at
branch offices located at the addresses set forth in Schedule A hereto and
desires to enter into an agreement pursuant to which it will sell, convey and
transfer such Branch Operations to JSM in accordance with, and subject to, the
terms of this Agreement to be operated, owned and managed by JSM under the
direction and supervision of the Independent Contractor; and
WHEREAS, JSM desires to acquire the Branch Operations subject to the terms of
this Agreement and to issue in exchange therefore, shares of common voting stock
in JSM; and
WHEREAS, as consideration for JSM's agreement to acquire the Branch Operations
and to enter into the IC Agreement, the Company has agreed to issue to JSM a
warrant to purchase one million shares of its common stock in accordance with
the terms of the warrant attached hereto as Schedule C ("Warrant");and
WHEREAS, the parties hereto have executed the IC Agreement as of December 19,
2002 and desire to amend and supplement such agreement, inter alia, in
contemplation of the transfer of the Branch Operations to JSM and to set forth
the terms and conditions of such transfer including provisions addressing the
terms under which the Branch Operations will be managed by the Independent
Contractor.
NOW THEREFORE, in consideration of the mutual promises and premises
contained herein, the parties hereto agree as follows.
1. Defined Terms. Capitalized terms, unless defined herein, shall have the
meaning ascribed to them in the IC Agreement.
2. Transfer of Branch Operations.
a. Subject to the provisions hereof, on the later to occur of (i)
February 15, 2003 or (ii) the date on which the parties have secured
any and all necessary approvals from all applicable Federal, State and
local regulatory agencies or authorities and clearing firms (the later
of such dates being referred to as the "Effective Date"), in exchange
for the Shares (hereinafter defined), the Company shall sell, assign
convey and transfer to JSM all assets necessary for, or incident to,
the operation of the Branch Operations ("Assets") including but not
limited to all customer accounts for any and all retail brokerage
accounts serviced by registered representatives at the Branch
Operations ("Transferred Accounts"), all books and records pertaining
to the Transferred Accounts, all funds or securities held for the
benefit of such Transferred Accounts; wire codes pertaining the Branch
Operations, and such other assets as may be necessary for the operation
of the Branch Operations as they currently exist. Those registered
representatives and other employees currently located at the Branch
Operations who are necessary for the effective operation of the Branch
Operations and who are listed on the attached Schedule B ("Transferred
Personnel"), shall be deemed employees of JSM as at the Effective Date
notwithstanding the mechanics of their compensation as set forth in the
IC Agreement. The Transferred Personnel shall come under the direct and
exclusive supervision and control of the Independent Contractor on the
Effective Date.
b. JSM and the Independent Contractor hereby agree to honor the
agreements (including without limitation, payouts, bonuses, splits,
overrides, expense reimbursements and staff support) between the
Company and the Transferred Personnel which are described in Schedule
7(d) and further described or reflected in the books and records of the
Company as of the date hereof including, without limitation, written
agreements between the Company and the Transferred Personnel as of the
date hereof which the parties hereto agree have been made available to
JSM and the Independent Contractor for their review. The parties
further agree that all forgivable loans on the books and records of the
Company as of the date hereof shall remain assets of the Company. JSM
and Independent Contractor agree to use their best efforts to cause
such Transferred Personnel to honor such forgivable loans as well as
any other existing obligations of such Transferred Personnel or loans
by the Company to such Transferred Personnel as reflected on Schedule
7(d) or otherwise reflected in the books and records of the Company as
of the date hereof. JSM and Independent Contractor agree that
commission amounts due to such Transferred Personnel pursuant to their
applicable agreements which are payable through the IC Agreement may be
offset by the Company.
c. The parties hereto agree that upon the termination or non-renewal of
the IC Agreement, (i) Transferred Personnel may elect to return to the
Company as employees without any potential legal or regulatory claim
against the Company by JSM or the Independent Contractor or obligation
or payment by the Company to JSM or the Independent Contractor, and
(ii) for a period of one year following such termination, the Company
will not, directly or indirectly, solicit or induce any employee,
consultant, or registered representative that is employed by, or under
the supervision of, JSM or Independent Contractor, other than
Transferred Personnel, to leave his or her employment or to otherwise
sever their relationship with JSM or the Independent Contractor.
d. JSM and the Independent Contractor agree the expansion and growth of
their business will be limited to New York City, Long Island, the New
York counties immediately surrounding and including New York City, the
New Jersey counties of Bergen, Essex and Xxxxxx, and the current
leaseholds (or successor locations thereto) located in Red Bank, N.J.
and Boca Raton, FL (excluding independent contractors or branch offices
of the Company)
3. Leaseholds. The parties understand that the physical office locations
occupied by the Branch Operations ("Leaseholds") will be shared by JSM and the
Company from and after the Effective Date. Prior to the Effective Date, the
Company and JSM will agree upon that portion of the space in each office
location that is to be occupied by JSM exclusively which shall based on optimum
occupancy of JSM/Independent Contractor personnel and a fixed number of Company
personnel at such offices ("Segregated Offices") and the parties further agree
to apply the same portion of the space that is to be shared ("Common Area"). The
percentage of space to be allocated to JSM in each Leasehold after the Effective
Date ("Occupancy Percentage"), and any personal property associated therewith,
is set forth on Schedule A hereto and shall be deemed to include both Common
Area and Segregated Area. On the Effective Date, JSM shall and does hereby
sublet and shall pay to the Company on a timely basis pursuant to the terms of
the applicable Leaseholds and underlying leases that portion of each of the
Leaseholds represented by multiplying the applicable Occupancy Percentage by the
amount of rent being paid under each respective Leasehold (reduced by any other
third party subtenant income received by the Company with respect to such
applicable Leasehold). For the purpose of providing a form of "rent concession"
to JSM, notwithstanding the Occupancy Percentage set forth on Schedule A hereto
applicable to the Leasehold in Red Bank, New Jersey, JSM shall be permitted to
occupy no less than fifty percent of the Segregated Offices and Common Area from
and after the Effective Date as if the Occupancy Percentage for the Red Bank
Leasehold was no less than fifty percent from and after the Effective Date. The
duration of the sublet shall be co-terminus with the underlying lease ("Lease")
for each particular Branch Operation. No renewal options under any Lease shall
be exercised by any party without the prior written consent of the other
parties. Each party, at the request of the any other party, agrees to execute a
sublease ("Sublease") for each Leasehold in form and substance reasonably
satisfactory to all parties provided that such Subleases shall not be
inconsistent with the terms and intent hereof. The rent under each Sublease
shall be equal to the total rent (including any items of additional rent, CAM or
other charges of any nature whatsoever payable to the landlord thereunder with
respect to occupancy of the respective Leaseholds from and after the Effective
Date) payable under each Lease multiplied by the applicable Occupancy
Percentage. Independent Contractor shall not be required to advance or post any
security deposit under any of the Leases or Subleases and any deposit previously
posted by the Company shall remain the property of the Company.
Each of the parties will cooperate with each other in the joint occupancy of the
Leaseholds where applicable and both parties agree that the Occupancy Percentage
for any Leasehold shall be adjusted at any time and from time to time by written
agreement of the parties to reflect fair adjustments in the proportionate use
and occupancy. The parties agree and understand that the Occupancy Percentage
should only be changed as a result of:
a. Changes in the number of JSM/Independent Contractor personnel above optimum
usage assuming there is no change above on the number of Company personnel on
the date hereof; or
b. An increase in the number of Company personnel above the fixed number on the
date hereof disproportionate to any increase above the optimum usage in the
number of JSM/Independent Contractor personnel at a particular Leasehold.
c. Unless the parties shall otherwise agree, the space currently occupied by JSM
at 000 Xxxxxxx Xxx. Xxx Xxxx, X. Y. may be utilized by both the Company and JSM
and as such shall be deemed one of the Leaseholds subject to the terms of the
this Agreement; provided however, the rent payable by the Company for
utilization of all or a portion of such space shall not exceed the rent the
Company would have spent for comparable space in its existing offices at its New
York City location.
JSM acknowledges that all of the furniture, fixtures and equipment located in
the Leaseholds (other than any personal property located at the existing offices
of JSM) including, but not limited to, the items of personal property listed on
Schedule 7(h) hereto, shall be retained by the Company but shall be leased to
JSM for its use in, and as part of, the Leaseholds for no additional rent, for
the term of the IC Agreement.
4. Operating Expenses. On and after the Effective Date, JSM shall pay and shall
cause to be paid or reimbursed to the Company, as the case may be, its
proportionate share of all operating expenses of the Branch Operations. The term
"Operating Expenses" shall mean, and be limited to the following:
a. All salaries, commissions, payroll taxes, insurance and other items of
compensation and expenses related thereto for all Transferred Personnel and any
additional employees that may be hired to work for or to be shared by (with the
Company) JSM/Independent Contractor after the Effective Date (hereinafter
"Compensation Expense"). Compensation Expense for any employee whose services
are shared by the Company and JSM/Independent Contractor shall be shared
proportionately by the Company and JSM/Independent Contractor; provided that JSM
shall not be responsible for any compensation expense for employees of the
Company not utilized by JSM/Independent Contractor in whole or part. Unless the
Company and JSM shall otherwise agree in writing, all personnel under the
supervision and control of the Independent Contractor shall nevertheless be
deemed employees of the Company for payroll and insurance purposes, and JSM
shall reimburse the Company for any expenses related thereto.
b. All telephone and other telecommunication charges for the Branch Operations
which shall be charged to JSM proportionately based upon the ratio of the number
of JSM/Independent Contractor employees utilizing such services compared to the
total number of individuals utilizing such services.
c. All ticket charges and fees and expenses normally paid by registered
representatives under the supervision and control of the Independent Contractor
which shall be paid in accordance with the IC Agreement.
d. All miscellaneous charges for the operation of the Branch Operations in the
Leaseholds including such items as equipment maintenance services contracts,
office supplies and utilities, all of which items shall be allocated and
apportioned based upon actual usage where possible or, if not, based upon the
ratio of the number of employees of JSM/Independent Contractor at a given
Leasehold location compared to the total number of individuals occupying or
utilizing such Leasehold.
e. The parties understand that the Independent Contractor is a majority
shareholder and control person of JSM. As such, the Independent Contractor
agrees that the Company shall be permitted to deduct from any commissions, fees
or other payments due to the Independent Contractor by the Company under the IC
Agreement any and all amounts due and owing to the Company by JSM under the
terms of this Agreement. In such event, the Independent Contractor shall have no
recourse or claim against the Company except through JSM and to the extent JSM
would have a claim or recourse pursuant to the terms of this Agreement.
5. Liabilities. Neither JSM nor the Independent Contractor shall be liable for
any costs, customer claims, customer account losses, expenses, claims,
obligations or liabilities of any nature or description, direct or indirect,
known or unknown, where such liabilities or claims arose from actions or
omissions of any employee, registered representative, officer or director of the
Company occurring prior to the Effective Date, or in any manner arose from
operation or ownership of the Branch Operations prior to the Effective Date. The
Company shall indemnify and hold harmless the Independent Contractor and JSM
from and against any such claims or liabilities in accordance with the
indemnification provisions set forth in Section 9 hereof. The Company shall not
be responsible for any claims or liabilities arising from operation or ownership
of the Branch Operations from and after the Effective Date and JSM shall
indemnify and hold harmless the Company from and against any such claims or
liabilities in accordance with the indemnification provisions set forth in
Section 9 hereof.
6. Issuance of Shares/Buy Back.
(a) In exchange for the transfer of the Branch Operations as
hereinabove set forth, JSM, on the Effective Date, shall issue and
transfer to the Company shares of its common voting stock representing
nineteen and nine-tenths percent (19.9%) of the total issued and
outstanding common stock of JSM after giving effect to the issuance of
the shares to the Company (such shares of common stock issued to the
Company being referred to herein as the "Transfer Shares"). The Company
shall have anti-dilution protection to maintain such nineteen and
nine-tenths percent (19.9%) ownership interest upon the exercise of
outstanding options or rights to acquire any of JSM's common stock
which options or rights are outstanding as of the Effective Date. The
Transfer Shares, when issued shall be deemed fully paid and
non-assessable.
(b) Upon the termination or non-renewal of the IC Agreement for any
reason other than (i) the termination of the IC Agreement by the
Independent Contractor due, in turn, to the termination of his
employment agreement ("Employment Agreement") by the Company without
Cause (as defined therein) or an occurrence of the Triggering Event
described in Section 5(a)(3) of the Employment Agreement, (ii) the
failure of the Company to agree to a renewal of the IC Agreement, on
substantially similar terms, at the expiration of its term, for
additional terms of not less than eighteen months each, or (iii) the
termination of the IC Agreement by the Independent Contractor under
Section 19 c). of the IC Agreement; then, and in such event, JSM shall
repurchase the Transfer Shares at a cash purchase price equal to the
greater of the following: (a) 1.5 times the net operating profits as
defined by GAAP of JSM, determined in accordance with generally
accepted accounting principles consistently applied, for its fiscal
year ending immediately prior to the event requiring the purchase
multiplied by 19.9%; or (b) 19.9% of the fair market value of JSM as of
the end of such fiscal year determined by an accounting firm mutually
agreeable to both parties (or, if the parties cannot agree upon an
accounting firm, each party shall choose a firm and the value shall be
determined by averaging the results obtained from both firms). Items
(a) and (b) above shall be reasonably adjusted to reflect any
Transferred Personnel who elect to be employed by the Company as
described in Section 2 c. above.
(c) In the event of a Change in Control as defined in the Employment
Agreement, the Company shall have the right to purchase ("Purchase
Option") the assets (excluding any stock or warrants to acquire stock
in the Company) of JSM ("JSM Assets"), free and clear of any liens
encumbrances or liabilities, pursuant to the following terms and
conditions: for a purchase price equal to the sum of (x) the greater of
(i) fair market value of the JSM Assets (valued as an asset sale of
100% of a going business concern), as of the end of the month following
the month in which the option is exercised, determined by an accounting
firm mutually agreeable to both parties (or, if the parties cannot
agree upon an accounting firm, each party shall choose a firm and the
value shall be determined by averaging the results obtained from both
firms), or (ii) Two Million Seven Hundred Thousand Dollars
($2,700,000); plus (y) the total amount of money funded, by an
individual or entity ("Investor") into JSM, whether in the form of debt
or equity, from the date of this Agreement through the date of exercise
of the Purchase Option plus an additional amount of money sufficient to
yield to each such Investor an annualized internal rate of return equal
to thirty percent. Concurrently with the closing on the acquisition of
the JSM Assets, JSM shall purchase, and the Company shall re-convey to
JSM, the Transfer Shares for an aggregate consideration of One Hundred
Dollars ($100). The Purchase Option may be exercised by written notice
to JSM received within ten days following a Change in Control ("Notice
Period") if the Purchase Option is not exercised within the Notice
Period, the option shall terminate and be of no further force of
effect. Upon exercise of the Purchase Option, the purchase price for
the JSM Assets shall be paid in immediately available funds within 10
days following the expiration of the Notice Period. The Purchase Option
shall terminate upon termination or non-renewal of the IC Agreement for
any reason. In the event the Purchase Option is not exercised within
eighteen (18) months from the date hereof, the Two Million Seven
Hundred Thousand Dollars ($2,700,000) shall increase quarterly on the
first day of each succeeding quarter annual anniversary date at the
rate of ten percent per annum compounded quarterly.
7. Representations of the Company. The Company makes the following
representations that shall be true and accurate on the Effective Date:
(a) Ownership of the Branch Operations. The Company owns all right,
title and interest in and to all assets utilized in, or
constituting part of, the Branch Operations being transferred to
JSM hereunder ("Assets"), free and clear of all liens, security
interests, claims and encumbrances whatsoever, and upon delivery
to JSM, at the Effective Date, of the Branch Operations, JSM shall
be the lawful owner of the Assets and Branch Operations, free and
clear of all liens, security interests, claims and encumbrances
whatsoever.
(b) Authority. The Company has the absolute and unrestricted
right, power, authority and capacity to execute and deliver this
Agreement and all documents and instruments specified in it and
to perform its obligations under this Agreement and under
all documents and instruments specified in it or
contemplated by it. The execution, delivery and performance of
this Agreement by the Company and all other agreements, documents
and instruments specified herein have been duly authorized by all
necessary action of the Company. Neither the execution, delivery
or performance of this Agreement by the Company, nor the
consummation of the transactions contemplated herein, will result
in a breach or violation of, or default under, or conflict with,
any law, rule, regulation, judgment, order, decree, mortgage,
agreement, indenture, instrument or arrangement applicable
to the Company. This Agreement constitutes the legal, valid and
binding obligation of the Company enforceable in accordance with
its terms. Neither the execution and delivery of this Agreement
by the Company, nor the consummation of the transactions
contemplated by this Agreement, shall (whether with or without
notice or the passage of time or both) (i) result in the
creation of any lien, security interest, charge, encumbrance
or other similar right of any person upon the Assets, (ii)
constitute a violation by the Company of any applicable law, rule
or regulation of any jurisdiction, or (iii) violate or conflict
with the Certificate of Incorporation or By-Laws of the
Company.
(c) Financial Information. Annexed hereto as Schedule 7(c) are the
financial operating profit and loss statements for the Branch
Operations for the month of November 2002 and year to date
("Financial Statements"). The Financial Statements are true,
accurate and complete in all material respects, and fairly present
the financial condition and results of operations of the Branch
Operations as of the date, and for the periods, covered thereby,
substantially in accordance with generally accepted accounting
principles, consistently applied. The Financial Statements have
been prepared from the books and records of the Company which
books and records fairly reflect all transactions to which the
Company was and is a part.
(d) Employment Matters. Set forth on Schedule 7(d) is a true and
complete list of all employees of the Company being transferred to
JSM, indicating with respect to each employee such employee's job
title and the date of commencement of employment of such employee.
No employees are covered by written employment agreements except
as indicated on the schedule and copies of such agreements or
summaries thereof have been provided to JSM. The Company is not in
default in any material respect under any such agreement. This
Agreement and the transactions contemplated hereby will not result
in any obligation on the part of the Company to pay any employees
severance pay, termination, retention or other benefits. The
Company has filed all unemployment compensation returns required
to be filed by the Company with respect to Transferred Personnel,
and all taxes shown on such unemployment compensation tax returns
have been properly and accurately determined, have been accrued to
the extent that such taxes are not yet due, and have been paid to
the extent that such taxes are due. The Company has paid all
payroll withholding or other taxes due or payable in connection
with the Transferred Personnel.
(e) Compliance with laws. The operations of the Company have been
conducted in accordance with all applicable laws, regulations and
other requirements of all national governmental authorities,
regulatory authorities and of all states, municipalities and other
political subdivisions and agencies thereof, haying jurisdiction
over the Company, including, without limitations of the Company,
antitrust, consumer protection, currency exchange, equal
opportunity, health, occupational safety and pension matters,
except for violations which could not reasonably be expected to
have a material adverse effect on the business, assets or
properties of the Company. Except as set forth on Schedule 7(e)
hereof, during the last twelve (12) months, the Company has not
received any notification of any asserted present or past failure
by the Company to comply with such laws, rules or regulations.
(f) SEC and NASD Matters. The Company is registered with the SEC and
is a member in good standing with the NASD. The Company is
registered with those States listed on the attached Schedule 7(f)
to conduct business as a broker/dealer. The Company has authority,
is in compliance under the NASD constitution and rules, and is
currently registered and approved to conduct a securities
business. Except as set forth on Schedule 7(f), there are no past,
pending or threatened proceedings involving the SEC, the NASD or
any state regulatory authority which may impair the ability of the
Company to conduct business as a broker/dealer. To the best
knowledge of the Seller, the Company is not in violation of the
applicable provisions of the Securities Exchange Act or the
general rules and regulations thereunder or the By-Laws and rules
of the NASD. Except as otherwise disclosed in this Agreement or in
any Exhibit or Schedule hereto, the Company is not the subject of
any currently pending or threatened material customer complaint,
inquiry, formal or official investigation, or disciplinary
proceeding undertaken by the NASD concerning the Company, or any
of its officers, directors, registered principals or registered
representatives of which the Company or its agents have knowledge.
There are no special restrictions or limitations imposed by the
NASD or the SEC on the Company relating to the manner in which the
Company conducts its business as a broker-dealer. As of the
Effective Date, there will be no fees or assessments owed to the
SEC, NASD, any state where the Company is registered, or to SIPC,
other than those regular fees or assessments incurred in the
ordinary course of business.
(g) Actions and Proceedings. There are no outstanding orders, charges,
directives, writs, injunctions or decrees of any court,
administrative agency, governmental or other regulatory body or
arbitration tribunal against, or affecting, the Company or any of
its property or assets which would have a material adverse effect
on the operations, assets, properties, results or condition
(financial or otherwise) of the Branch Operations.
(h) Leases and Leaseholds. Copies of Leases for the Leaseholds have
been delivered by the Company to JSM which leases are in full
force and effect and there are no defaults existing thereunder.
.
(i) Employee Benefit Plans. The Company has delivered to JSM copies of
all Employee Benefit Plans in which any of the Transferred
Personnel was or would have been eligible to participate. As used
herein, "Employee Benefit Plan" means any pension, profit-sharing,
retirement, deferred compensation, bonus, stock purchase, stock
option, severance, hospitalization, medical insurance, life
insurance, medical and dental insurance, fringe benefit, vacation
policy, permissible leave policy or other employee benefit plan,
agreement, arrangement or understanding.
(j) Insurance. Schedule 7(j) contains a complete and correct list of
all insurance policies carried by, or covering, the Company with
respect to its business and the Branch Operations, together with,
in respect of each such policy, the name of the insurance carrier,
the policy number, the risk insured against, the limits of
coverage, the policy term and the expiration date thereof. All
such policies are in full force and effect, and no notice of
cancellation has been given with respect to any such policy. All
premiums due thereon have been paid in a timely manner.
(k) Third Party Consents. Except with respect to the consent of the
NASD, there are no consents, waivers, authorizations or approvals
of any governmental or securities regulatory authority, or of any
other person, that are required in connection with the execution
and delivery of this Agreement or the performance by the parties
of their respective obligations hereunder.
(l) Survival. All of the representations contained in this Section 7
shall survive for a period of eighteen months following the
Effective Date.
8. Representations of JSM. JSM makes the following representations and
warranties that shall be true and accurate on the Effective Date:
(a) Authority. JSM has full power and authority to execute and deliver
this Agreement and all agreements, documents and instruments
specified in it, and to perform its obligations under this
Agreement and under such instruments and documents.
(b) Authorization. Neither the execution, delivery or performance of
this Agreement by JSM, nor the consummation of the transactions
contemplated herein, will result in a breach or violation of, or
default under, or conflict with, any law, rule, regulation,
judgment, order, decree, mortgage, agreement, indenture,
instrument or arrangement applicable to JSM.
(c) Binding Obligation. This Agreement and the other agreements,
documents and instruments specified herein to be executed and
delivered at the Closing constitute legal, valid and binding
obligations of JSM, enforceable against JSM in accordance with
their respective terms.
(d) Approval of Transaction. Except for the consent of the NASD, no
consent, approval, authorization, license, permit or other action
by, and no filing or registration with any governmental or
regulatory authority is required for the execution and delivery of
this Agreement by the JSM, or for the consummation by the JSM of
the transactions contemplated by this Agreement.
(e) Claims and Litigation. No actions, suits, claims, litigation,
arbitration proceedings, administrative proceedings or
investigations are pending or threatened against JSM which could
adversely affect the consummation of this transaction.
(f) Transfer Shares. The Transfer Shares, when issued, will be free
and clear of all liens, security interests, claims and
encumbrances whatsoever, and upon delivery to the Company, at the
Effective Date, of the certificates representing the Transfer
Shares, duly endorsed for transfer to the Company, the Company
shall be the lawful owner of the Transfer Shares, free and clear
of all liens, security interests, claims and encumbrances
whatsoever. The Transfer Shares represent 19.9% of the outstanding
shares of capital stock of the Company as at the Effective Date.
Schedule 8 (f) sets forth the capitalization, ownership,
outstanding options, warrants or similar share rights, and
corporate chart showing all subsidiaries and affiliates of JSM.
(g) Survival. All of the representations contained in this Section 8
shall survive for a period of eighteen months following
the Effective Date.
9. Indemnification.
(a) Except as otherwise provided herein below, JSM shall indemnify and
hold harmless the Company and its respective affiliates, officers, directors,
shareholders, employees and controlling persons and the Company shall indemnify
and hold harmless JSM and its respective affiliates, officers, directors,
shareholders employees and controlling persons (the indemnifying party in each
case being referred to as the "Indemnifying Party" and the indemnified party in
each case being referred to as the "Indemnified Party"), against and in respect
of any claim, damage, loss liability award, cost or expense resulting from any
claims actions suits arbitrations, proceedings, demands, judgments, costs or
expenses (including reasonable legal expenses) arising from or incurred in
connection with any of the following:
(i) Any unauthorized actions, violations of securities laws, rules
or regulations; breach by the Indemnifying party of supervisory or
compliance procedures and manuals; misconduct by the Indemnifying
Party (or by any other person employed at or associated with a branch
office of the respective party); or any other activity of the
Indemnifying Party, or by any other person employed at or associated
with either the main office or a branch office of such Indemnifying
Party, as the case may be, or otherwise resulting from the operation
of the main office or the branch office, as the case may be;
(ii) Investigations incident to the forgoing;
(iii) Any negligent act or omission of the Indemnifying Party
(and any negligent act or omission by any other person employed at
or associated with the main office or a branch office of such party)
or otherwise resulting from the operation of the main office or the
branch office, as the case may be;
(iv) With respect to JSM, any and all obligations with respect to
operation of the Branch Operations from and after the Effective Date.
(v) With respect to the Company, any and all obligations with
respect to operation of the Branch Operations prior to the Effective
Date.
(b) Except as may be provided below, each party shall indemnify and
hold harmless the other party for any misrepresentation, omission, or breach of
any agreement, representation, covenant term or condition on the part of the
other party to be performed fulfilled or complied with under this agreement or
any other document furnished by one to the other.
(c) The Indemnifying Party will not, without the prior written consent
of the Indemnified Party, settle, compromise or consent to the entry of any
judgment in any pending or threatened claim, arbitration, action or proceeding
in respect of which any liability could be asserted against the Indemnified
Party, unless such settlement, compromise or consent includes an unconditional
general release of the Indemnified Party from all liability arising out of such
claim or proceeding.
(d) Promptly after receipt by an Indemnifying Party of notice of the
commencement of any action, the Indemnifying Party will, if a claim is made
against the Indemnified Party, notify the Indemnified Party. In case any action
is brought against an Indemnified Party, the Indemnified Party will be entitled
to participate therein and assume the defense thereof with counsel reasonably
satisfactory to the Indemnifying Party; provided, however, the where the claims
would exceed $150,000, the Indemnifying Party shall have the right to appoint
qualified legal counsel reasonably acceptable to the Indemnified Party to defend
the matter.
(e) In the event an Indemnifying Party fails to defend any action
described herein, the Indemnified Party shall have the right to assume such
defense, retain counsel and settle or dispose of such matter in its sole
discretion, and the Indemnifying Party shall be responsible for the payment of
any settlement, award or the like in addition to the costs and attorney's fees
incurred in connection with the defense.
10. IC Agreement Term. The Term of the IC Agreement shall be and is
hereby amended as follows:
(a) Section 2 of the IC Agreement shall be read to provide that the initial term
is reduced from three (3) years to eighteen (18) months.
(b) Sections 19 f. (ii) and (iii) of the IC Agreement shall be read to provide
any Change in Control as defined in the Employment Agreement shall not be
deemed, or in any be grounds for, an event of default.
(c) Section 19 f. (iii) of the IC Agreement shall be read to provide that
resignation or voluntary termination by the Independent Contractor under
Sections 5 (a) (2) and 6 (c) of the Employment Agreement shall not be deemed, or
be grounds for, an event of default.
(d) Section 19 g. is hereby deleted in its entirety. and amended to provide
that, additionally, the Independent Contractor can terminate the IC Agreement in
the event of the insolvency or bankruptcy of the Company or a material adverse
change in the business prospects of the Company which could reasonably and
imminently jeopardize the ability of the Company to continue in business.
11. Issuance of Warrant. In consideration of JSM's agreement to acquire the
Branch Operations and to enter into the IC Agreement, on the date hereof the
Company shall issue to JSM the Warrant described in Schedule C.
12. Miscellaneous.
(a) Entire Agreement. This Agreement (together with the Schedules and
Exhibits hereto and the IC Agreement) contains, and is intended as a complete
statement of all of the terms of the arrangements between the parties with
respect to the matters provided for, and, except as provided herein, supersedes
any previous agreements and understandings between the parties with respect to
those matters. This Agreement is designed to amend and supplement the IC
Agreement which shall remain in full force and effect in accordance with its
terms.
(b) Governing Law. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the State of New York, without
regard to its principles of conflicts of law.
(c) Headings. The section headings of this Agreement are for reference
purposes only and are to be given no effect in the construction or
interpretation of this Agreement.
(d) Notices. All notices and other communications under this Agreement
shall be in writing and shall be deemed given when delivered personally, mailed
by registered mail, return receipt requested, sent by recognized overnight
delivery service or, to the extent receipt is confirmed, by facsimile, telefax,
or other electronic transmission service, to the parties at their respective
addresses set forth in the preamble to this Agreement.
(e) Amendment and Waiver. No provision of this Agreement may be amended
or modified except by an instrument or instruments in writing signed by the
parties hereto. Any party may waive compliance by another party with any of the
provisions of this Agreement. No waiver of any provision hereof shall be
construed as a waiver of any other provision. Any waiver must be in writing.
(f) Assignment and Binding Effect. Neither party hereto may assign any
of its rights or delegate any of its duties under this Agreement without the
prior written consent of the other party; provided that, consistent with the
terms of the IC Agreement, the Independent Contractor may assign any of his
rights and duties hereunder to JSM if it is legally permissible to do so. All of
the terms and provisions of this Agreement shall be binding on, and shall inure
to the benefit of, the respective heirs, personal representatives, successors
and permitted assigns of the parties.
(g) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and each party thereto
may become a party hereto by executing a counterpart hereof. This Agreement and
any counterpart so executed shall be deemed to be one and the same instrument.
(h) Expenses. Each of the parties hereto shall bear its own expenses
relating to the transactions contemplated hereby.
(i) Further Assurances. Each party covenants that it will execute
such additional documents and take such additional actions as may be reasonably
requested by any other party to confirm or perfect or otherwise to carry out the
intent and purposes of this Agreement and the transactions related hereto, and
that it will promptly take all commercially reasonable efforts to obtain all
licenses and approvals required to consummate the transactions contemplated
hereby.
(j) Arbitration. Any controversy, claim or counterclaim arising out of
or in connection with this Agreement, whether in contract, in tort or asserting
rights created by Federal or state statues or otherwise, shall be governed by
the Code of Arbitration Procedure of the NASD. Arbitration shall be conducted in
Atlanta, Georgia in accordance with the Rules of the NASD, and judgment on the
award rendered by the arbitrators may be entered in any court having
jurisdiction thereof. The arbitrators may grant any remedy or relief that they
deem just and equitable including, but not limited to, specific performance of a
contract. Each party irrevocably consents to subject matter and personal
jurisdiction before the NASD. The parties covenant that under no conditions will
any of them file any action at law against any other party or bring any claim in
any forum other than before the NASD; provided, however, that all parties hereto
consent to the jurisdiction of any court of competent jurisdiction to obtain any
preliminary relief, such as a restraining order, injunction, or any other
immediate relief sought, pending the determination of the arbitration
proceeding.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date and year first above written.
JSM CAPITAL HOLDING CORP. VFINANCE INVESTMENTS, INC.
BY:_____________________________ By:___________________________
INDEPENDENT CONTRACTOR
-----------------------------
Xxxx X. Xxxxxxxx, Individually
