EXHIBIT 10.10
JOINT VENTURE AGREEMENT
between
INTERNATIONAL ASSETS HOLDING CORP.
and
LAKESIDE INVESTMENTS, LLC
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS AND INTERPRETATION.....................................1
1.1 Definitions.................................................1
1.2 Interpretation..............................................4
ARTICLE 2 THE COMPANY........................................................5
2.1 Formation..............................................5
2.2 Purpose................................................6
2.3 Place of Business......................................6
2.4 Term...................................................6
2.5 Statutory Compliance...................................6
2.6 Title to Property......................................6
2.7 Payments of Individual Obligations.....................6
ARTICLE 3 PARTIES' CAPITAL CONTRIBUTIONS.....................................7
3.1 Initial Capital Contributions and Percentage Interests.7
3.2 Additional Capital Contributions.......................7
3.3 Other Matters..........................................8
ARTICLE 4 MANAGEMENT........................................................8
4.1 Management of the Company..............................8
4.2 Membership of Board of Managers........................8
ARTICLE 5 OPERATIONS OF THE COMPANY.........................................9
5.1 Business Plan..........................................9
5.2 Budget.................................................9
5.3 Deadlock..............................................10
ARTICLE 6 ACCOUNTING, BOOKS, RECORDS AND REPORTS...........................11
6.1 Accounting, Books and Records.........................11
6.2 Tax Returns; Information..............................11
6.3 Reports...............................................12
6.4 Certified Public Accounting Firm......................12
ARTICLE 7 PRODUCTS.........................................................12
7.1 Products Made Available to the Company................12
7.2 Company Products Developed by the Joint Venture.......12
7.3 Costs Associated with the Marketing and Sale of
Company Products......................................13
-i-
RTICLE 8 TRANSFERS OF INTERESTS...........................................13
8.1 Restrictions on Transfers.............................13
8.2 Permitted Transfers...................................14
8.3 Purchase and Sale Rights..............................14
8.4 General Provisions Regarding Transfers................15
ARTICLE 9 COMPLIANCE WITH LAW..............................................16
9.1 General Compliance....................................16
ARTICLE 10 [Intentionally Omitted]..........................................16
ARTICLE 11 INDEMNIFICATIONS................................................17
11.1 Parties' Indemnification...............................17
11.2 Indemnification as to Actions or Omissions in
Company's Business..................................17
11.3 Cross Indemnification..................................17
11.4 Indemnifications by Lakeside...........................18
11.5 Indemnifications by IAHC...............................19
11.6 Procedure for Indemnification..........................19
11.7 Survival...............................................19
ARTICLE 12 EVENTS OF DEFAULT...............................................19
12.1 Events of Default......................................19
12.2 Remedies Upon Default..................................21
ARTICLE 13 TERMINATION.....................................................21
13.1 Passage of Time........................................21
13.2 Early Termination......................................21
13.3 Dissolution, Liquidation, and Winding Up Generally.....22
ARTICLE 14 MISCELLANEOUS...................................................22
14.1 Notices................................................22
14.2 Binding Effect.........................................22
14.3 Construction...........................................23
14.4 Headings...............................................23
14.5 Severability...........................................23
14.6 Further Action.........................................23
14.7 Governing Law..........................................23
14.8 Counterpart Execution..................................23
14.9 Force Majeure..........................................24
14.10 Entire Agreement.......................................24
14.11 Conflict with LLC Agreement............................24
14.12 Confidentiality........................................24
14.13 Due Authorization......................................26
14.14 No Third Party Rights..................................26
14.15 Dispute Resolution.....................................26
-ii-
-ivi-
EXHIBITS
Exhibit 5.2 Budget
-v-
JOINT VENTURE AGREEMENT
This Joint Venture Agreement (the "Agreement") made this 30th day of September,
1998 (the "Effective Date"), by and between International Assets Holding Corp.,
a corporation organized under the laws of Delaware ("IAHC"), and Lakeside
Investments, LLC, a limited liability company organized under the laws of
Delaware ("Lakeside") (IAHC and Lakeside being collectively referred to herein
as the "Parties," and either one of them as a "Party");
WITNESSETH:
WHEREAS, the Parties intend to form a joint venture for the purpose of marketing
and selling certain securities related products developed by International
Assets Advisory Corp., a subsidiary of IAHC ("IAAC"), and by Lakeside, and new
products to be developed by the joint venture (the "Business");
WHEREAS, the Parties intend that their joint venture relationship should be
governed by the terms and conditions of this Agreement and the ancillary
agreements referred to in this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants,
promises and agreements hereinafter contained, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties, intending to be and being legally bound, hereby agree as follows:
ARTICLE 1
DEFINITIONS AND INTERPRETATION
1.1 Definitions. Capitalized words and phrases used in this Agreement have the
following meanings:
(a)
"Additional Capital Contribution" has the meaning given in the LLC
Agreement.
(b) "Adverse Event" shall have the meaning set forth in Section 3.2.
(c) "Affiliate" of a Person shall mean a company, corporation, Company, or other
Person that the Person, whether directly or indirectly, controls, is controlled
by, or is under common control with; provided however that neither IAHC nor
Lakeside shall be deemed to be an Affiliate of the other. For purposes of this
definition "control" shall exist if such Person has direct or indirect ownership
of 50% or more of the voting securities or other ownership interests of such
Person.
(d) "Agreement" means this Agreement, as amended from time to time. Words such
as "herein," "hereinafter," "hereof," "hereto," and "hereunder" refer to this
Agreement as a whole, unless the context otherwise requires.
(e) "Board of Managers" means the Board of Managers of the Company.
(f) "Budget" means the Company's budget for a given Fiscal Year which has been
approved pursuant to Section 5.2, which Budget will include (i) an income
statement prepared on an accrual basis which will show in reasonable detail the
revenues and expenses projected for the Company's business for such Fiscal Year,
(ii) a cash flow statement which will show in reasonable detail the receipts and
disbursements projected for the Company's business for such Fiscal Year and the
amount of any corresponding cash deficiency or surplus, (iii) any contemplated
borrowings of the Company for such Fiscal Year, (iv) any Additional Capital
Contributions required of the Parties for such Fiscal Year.
(g) "Business" has the meaning set forth in the first recital to this Agreement.
(h) "Business Plan" means the overall business plan of the Company for a given
Fiscal Year, and modifications or amendment thereto, as approved in accordance
with the Section 5.1.
(i) "Call Right" shall have the meaning set forth in Section 8.3(b).
(j) "Company" means the limited liability company formed pursuant to this
Agreement.
(k) "Company Products" shall have the meaning set forth in Section 7.2.
(l) "Consumer Price Index" shall mean the average price index for the prior
twelve (12) months, counting from the first day of each Fiscal Year, for the New
York City metropolitan area as published monthly by the Bureau of Labor
Statistics of the United States Department of Labor.
(m) "Default Budget" shall have the meaning set forth in Section 5.2(b).
(n) "Default Budget Year" shall have the meaning set forth in Section 5.2(b).
(o) "Defaulting Party" shall have the meaning set forth in Section 12.1.
-2-
(p) "Delaware Act" shall mean the Delaware Limited Liability Company Act at
Title 6 of the Delaware Code, ss 18-101 through ss 18-1109, as the same may be
amended from time to time.
(q) "Entity" shall mean any general partnership, limited partnership, limited
liability company, corporation, joint venture, trust, business trust,
cooperative, association, foreign trust or foreign business organization.
(r) "Event of Default" shall have the meaning given in Section 12.1.
(s) "Fiscal Year" means the Company's fiscal year, which shall end on September
30.
(t) "Force Majeure" shall mean all events which are beyond the control of the
Parties to this Agreement and which are unforeseen, unavoidable or
insurmountable, and which prevent total or partial performance by a Party. Such
events shall include any strikes, lockouts, explosions, shipwrecks, acts of
nature or the public enemy, fires, floods, sabotage, accidents, wars, riots,
interference by military authorities, insurrections and any other similar
incident.
(u) "Indemnified Party" shall have the meaning set forth in Section 11.6(a).
(v) "Indemnifying Party" shall have the meaning set forth in Section 11.6(a).
(w) "Indemnitees" has the meaning given in Section 11.2.
(x) "Know-How" shall have the meaning set forth in Section 14.12(b).
(y) "LLC Agreement" has the meaning given in Section 2.1.
(z) "Manager" shall mean any one or more of the members of the Board of Managers
of the Company.
(aa) "Membership Interest" has the meaning given in the LLC Agreement.
(bb) "Non-Defaulting Party" shall have the meaning set forth in Section 12.1.
(cc) "Option Agreement" shall mean the option agreement to be entered into
between the parties.
-3-
(dd) "Parties" means those Entities executing this Agreement. "Party" means any
one of the Parties. All references in this Agreement to a majority of the
Parties shall mean Parties whose combined Percentage Interests equal more than
fifty percent (50%).
(ee) "Percentage Interest" has the meaning given in the LLC Agreement.
(ff) "Permitted Transfer" has the meaning set forth in Section 8.2(b).
(gg) "Person" shall mean any individual or Entity, and their heirs, executors,
administrators, legal representatives, successors and assigns where the context
so permits.
(hh) "President" shall have the meaning given in the LLC Agreement.
(ii) "Products" shall mean the proprietary securities products marketed and sold
by the Company.
(jj) "Property" means all real and personal property acquired by the Company and
any improvements thereto, and shall include both tangible and intangible
property, as well as the contractual rights of the Company.
(kk) "Put Right" shall have the meaning set forth in Section 8.3(a).
(ll) "SEC" shall have the meaning set forth in Section 3.2.
(mm) "Transfer" means, as a noun, any voluntary or involuntary transfer, sale,
pledge, encumbrance or other disposition and, as a verb, voluntarily or
involuntarily to transfer, sell, pledge, encumber or otherwise dispose of.
1.2 Interpretation.
In this Agreement, unless the context otherwise requires:
(a) words importing the singular include the plural and vice versa;
(b) words importing a gender include both genders;
(c) references to any document (including this Agreement) are references to that
document as amended, consolidated, supplemented, novated or replaced from time
to time;
(d) references to Articles, Sections and Exhibits are references to articles and
sections of, and exhibits to, this Agreement;
-4-
(e) headings are for convenience only and shall be ignored in construing this
Agreement;
(f) references to any Party include references to its successors and permitted
assigns;
(g) references to law include references to any constitutional provision,
treaty, decree, convention, statute, act, regulation, rule, ordinance,
subordinate legislation and any judgment or determination of any competent
authority;
(h) references to any law are references to that law as amended, consolidated,
supplemented or replaced from time to time; and
(i) references to any judgment include references to any order, injunction,
decree, determination or award of any court or tribunal.
ARTICLE 2
THE COMPANY
2.1 Formation.
In order to carry out the purposes of this Agreement, the Parties shall form a
Delaware limited liability company to be named International Assets New York,
LLC (the "Company") and shall enter into an operating agreement for the Company
substantially in the form of Exhibit 2.1 (the "LLC Agreement"). The Business
shall be conducted by the Company in accordance with the LLC Agreement and with
this Agreement.
2.2 Purpose.
(a) The purpose of the Company will be to carry out the Business. The Company
will have all powers necessary to engage in any and all activities which the
Parties deem necessary or desirable to accomplish the purpose of the Company.
(b) The Company shall exist and act only for the purpose specified in this
Section 2.2. Except as otherwise provided in this Agreement, the Company shall
not engage in any other activity or business. Neither Party shall have any
authority to hold itself out as a general agent of the other Party in any other
business or activity.
2.3 Place of Business.
The principal place of business of the Company shall be International Assets New
York, LLC, New York, New York, or at such other place within or without the
State of Delaware as may be determined by the Parties.
-5-0
2.4 Term.
The term of the Company shall commence on the date hereof and shall continue
until December 31, 2020, unless earlier terminated.
2.5 Statutory Compliance.
The Company shall exist under and be governed by the applicable laws of the
State of Delaware. The Parties shall make all filings and disclosures required
by, and shall otherwise comply with, all such laws. The Parties shall execute
and file in the appropriate records within or without the State of Delaware any
assumed or fictitious name certificates and other documents and instruments as
may be necessary or appropriate with respect to the formation of, and conduct of
business by, the Company.
2.6 Title to Property.
All Property owned by the Company shall be owned by the Company as an entity and
no Party shall have any ownership interest in such property in its individual
name or right, and each Party's interest in the Company shall be personal
property for all purposes. Except as otherwise provided in this Agreement, the
Company shall hold all of its Property in the name of the Company and not in the
name of either Party.
2.7 Payments of Individual Obligations.
The Company's credit and assets shall be used solely for the benefit of the
Company, and no asset of the Company shall be transferred or encumbered for or
in payment of any individual obligation of a Party.
ARTICLE 3
PARTIES' CAPITAL CONTRIBUTIONS
3.1 Initial Capital Contributions and Percentage Interests.
(a) Immediately following the effectiveness of this Agreement and the formation
of the Company, IAHC shall contribute to the Company $100,000 in cash.
(b) Immediately following the effectiveness of this Agreement and the formation
of the Company, Lakeside shall contribute to the Company $100,000 in cash.
(c) The initial Percentage Interest of each Party in the Company is the
percentage interest set forth in Exhibit A to the LLC Agreement.
-6-
(d) The Parties' capital contributions and capital accounts in the Company shall
be governed by the terms of the LLC Agreement. The Parties' Percentage Interests
shall be governed by the terms of the LLC Agreement.
3.2 Additional Capital Contributions.
(a) On such date or dates as may be specified in the Budget adopted by the
Parties, each Party shall provide one or more Additional Capital Contributions
of a mutually-agreed upon sum not exceeding $100,000 per Party in the aggregate,
provided, however, neither Party shall be required to make an Additional Capital
Contribution if any of the following events (an "Adverse Event") occur:
(i) the Company is the subject of an investigation by the NASD or Securities and
Exchange Commission ("SEC") with respect to any sales or trading practices or
other matter relating to the Business other than routine inspections of the
Company's books and records; or
(ii) the Company is the subject of a lawsuit in which the relief sought against
the Company is greater than $500,000.
(b) In the event that either Party elects not to make an Additional Capital
Contribution due to the occurrence of an Adverse Event, neither Party shall make
such Additional Capital Contribution. During the ninety (90) day period
following the occurrence of an Adverse Event, IAHC shall have the right to
exercise its Put Right under Section 8.3(a), and Lakeside shall have the right
to exercise its Call Right under Section 8.3(b).
3.3 Other Matters.
Except as otherwise provided in this Agreement or in the LLC Agreement no Party
shall demand or receive a return of its contributions to the Company without the
consent of all Parties. Under circumstances requiring a return of any
contribution to the Company, no Party shall have the right to receive property
other than cash except as may be specifically provided in this Agreement or the
LLC Agreement.
ARTICLE 4
MANAGEMENT
4.1 Management of the Company.
(a) The management of the Company will be undertaken in accordance with the
applicable provisions of the LLC Agreement.
-7-
(b) The initial officers of the Company shall consist of a President, Vice
President, Secretary and Treasurer. IAHC shall have the right to appoint the
Vice-President and the Treasurer, and Lakeside shall have the right to appoint
the President and the Secretary.
(c) ▇▇▇▇ ▇▇▇▇▇▇▇ shall be the initial President, and shall receive an initial
salary of Seventy-Five Thousand Dollars ($75,000) per year. Such salary shall be
increased at the beginning of each Fiscal Year following the initial Fiscal Year
of the Company in an amount equal to the prior year's salary multiplied by the
prior year's Consumer Price Index percentage amount. A bonus may be paid from
time to time in the sole discretion of the Board of Managers. Operation of the
Business shall be ▇▇. ▇▇▇▇▇▇▇'▇ primary endeavor. ▇▇. ▇▇▇▇▇▇▇ may engage in
other business activities provided such activities are not competitive with the
Business of the Company and do not interfere with the fulfillment of his
obligations to the Company as determined from time to time by the Board of
Managers.
4.2 Membership of Board of Managers.
Each of the Parties shall have the right to nominate two of the Managers. IAHC
shall nominate Diego ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as its initial Managers, and
Lakeside shall nominate ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ as its initial
Managers. Each of the Parties covenants that it shall take all actions from time
to time necessary or desirable including, without limitation, the voting of its
Membership Interest, the execution of written consents, the calling of special
meetings, the waiving of notice and the attending of meetings, so as to cause
the two persons nominated by the other Party to be Managers for so long as the
other Party shall so desire. Each Party also agrees to take all action necessary
to remove forthwith any Manager when (and only when) such removal is requested
for any reason with or without cause by the Party that nominated such Manager
and in the case of death, resignation or other removal as herein provided of
such a Manager, to appoint forthwith another Manager nominated by the same Party
that nominated the deceased, resigning or removed Manager.
ARTICLE 5
OPERATIONS OF THE COMPANY
5.1 Business Plan.
(a) The Company shall carry out, and the Parties shall cause the Company to
carry out, all activities which are necessary to meet the objective of the
Company's then applicable Business Plan.
-8-
(b) The initial Business Plan will be developed by the Parties on or before
September 30, 1998.
(c) The Business Plan shall be reviewed at least annually by the President and
shall be submitted to the Board of Managers for its review and consideration
within forty-five (45) days before the end of each Fiscal Year of the Company.
The Business Plan presented to the Board of Managers may be amended or modified
by the Board of Managers, and the Business Plan, as approved by the Board of
Managers, shall be implemented by the Company during the following Fiscal Year.
5.2 Budget.
(a) To meet the objectives of the Business Plan as from time to time in force,
the Company shall establish a Budget for each Fiscal Year of the Company. The
Budget for the first Fiscal Year is attached hereto as Exhibit 5.2. At least
forty-five (45) days before the end of each Fiscal Year the President will
provide the Board of Managers with a proposed Budget for the forthcoming Fiscal
Year, for approval by the Board of Managers.
(b) If the Budget for any Fiscal Year thereafter has not been approved by the
Board of Managers by the last day of the preceding Fiscal Year, the Budget for
the preceding Fiscal Year (the "Default Budget") will remain in effect for such
new Fiscal Year (the "Default Budget Year"), as adjusted (without duplication)
to reflect increases or decreases resulting from the following events:
(i) the operation of escalation or de-escalation provisions in contracts in
effect at the time of approval of the prior Fiscal Year's Budget solely as a
result of the passage of time or the occurrence of events beyond the control of
the Company to the extent such contracts are still in effect and have not been
terminated;
(ii) elections made in any prior Fiscal Year under contracts contemplated by the
Budget for the prior Fiscal Year regardless of which party to such contracts
makes such election;
(iii) increases or decreases in expenses attributable to the annualized effect
of employee additions or reductions during the prior Fiscal Year contemplated by
the Budget for the prior Fiscal Year;
(iv) interest expense attributable to any loans made to the Company;
(v) increases or decreases in overhead expenses in an amount equal to the total
of overhead expenses reflected in the Budget for the prior Fiscal Year
-9-
(excluding nonrecurring items) multiplied by the increase or decrease in the
Consumer Price Index for the prior year (but in no event will such change be
more than 5% of the corresponding items in the prior Fiscal Year Budget); and
(vi) decreases in expense attributable to non-recurring items reflected in the
prior Fiscal Year's Budget.
(c) Following the approval of the Business Plan and Budget for a Fiscal Year (or
deemed approval in the case of a Default Budget), the President of the Company
will cause a copy of such Business Plan and Budget to be delivered to each
Party. In the event any modification to the Business Plan or Budget is adopted
in accordance with this Agreement, the President will promptly issue a revised
Business Plan or Budget reflecting such modification for the remainder of such
Fiscal Year and deliver a copy of it to each Party.
5.3 Deadlock.
(a) In the event that in two consecutive meetings the Board is unable to reach a
decision on any of the matters listed in Section 5.3(b), either Party may
request in a writing to the other Party that the President (or his designee) of
each of the Parties use all reasonable efforts to reach agreement on the matter.
If the Parties' Presidents or designees do not reach agreement in writing on the
matter within fourteen (14) days of the date of receipt of such a written
request, then the Parties may, at any time between the fifteenth and the
twenty-second day after the date or receipt of the written request, exercise
their respective Put Right and Call Right pursuant to, and in accordance with,
the provisions of Section 8.3.
(b) The matters as to which Section 5.3(a) applies are:
(i) The approval of the Budget for a Fiscal Year (other than the first Fiscal
Year of the Company), if the Company failed to meet the sales and earnings
targets set for the Company in the Budget for the prior Fiscal Year; or
(ii) The raising of additional funds for the Company if the Company failed to
meet the sales and earnings targets set for the Company in the Budget for the
prior Fiscal Year.
-10-
ARTICLE 6
ACCOUNTING, BOOKS, RECORDS AND REPORTS
6.1 Accounting, Books and Records.
The Company shall maintain, and the Parties shall cause the Company to maintain,
at IAHC's principal place of business separate books of account for the Company
which shall show a true and accurate record of all costs and expenses incurred,
all charges made, all credits made and received, and all income derived in
connection with the operation of the Company's business in accordance with
generally accepted accounting principles consistently applied and, to the extent
inconsistent therewith, in accordance with this Agreement. The Company shall use
the accrual method of accounting in preparation of its annual reports and for
tax purposes and shall keep its books accordingly. Each Party shall, at its sole
expense, have the right, at any time without notice to any other Party, to
examine, copy, and audit the Company's books and records during normal business
hours.
6.2 Tax Returns; Information.
The Parties shall cause the Company's accountants to prepare all income and
other tax returns of the Company and shall cause the same to be filed in a
timely manner. The Parties shall cause the Company to furnish to each Party a
copy of each such return, together with any schedules or other information which
each Party may require in connection with such Party's own tax affairs.
6.3 Reports.
Within thirty days of the end of each calendar year the President of the Company
shall provide the Parties with summary financial information in a format to be
determined by the Board of Managers relating to the operations of the Company
for the year just ended. The President shall also prepare annual financial
statements, including balance sheets, statements of operations, Company
interests and cash flow, for each fiscal year of the Company. The annual
financial statements shall be prepared in accordance with U.S. generally
accepted accounting principles.
6.4 Certified Public Accounting Firm.
The Company shall retain a nationally recognized (that is, one of the six
largest) independent certified accounting firm to audit its annual financial
statements. The Company shall cause draft, unaudited financial statements to be
provided to the Parties within 60 days following the end of each Fiscal Year and
the audited annual financial statements and the report of the certified public
accounting firm shall be provided, together with any management letter prepared
-11-
by such accounting firm, to the Parties within 90 days following the end of each
Fiscal Year.
ARTICLE 7
PRODUCTS
7.1 Products Made Available to the Company.
(a) Each Party hereby promises to make its Products available to the Company, in
a nonexclusive manner, for the purpose of marketing and selling the Products by
the Company.
(b) The Parties shall provide the Company at cost with such marketing
information concerning the Products as the Company may reasonably require in
order to assist the Company with the marketing and sale of the Products.
(c) The Parties shall similarly provide other information to the Company as the
Board of Managers of the Company may from time to time reasonably request, to
facilitate the Company's marketing and sale of the Products, including, but not
limited to mail lists.
7.2 Company Products Developed by the Joint Venture.
Any securities products developed by the Company (the "Company Products") shall
be the property of the Company, in accordance with Section 2.6 hereof.
7.3 Costs Associated with the Marketing and Sale of Company Products
IAHC shall undertake to enter into a Services Agreement between IAHC and the
Company, which shall govern the provision of services by IAHC to the Company.
Such services shall include, but not be limited to, the provision of
sub-clearing services, registration of Company Products, and sales and
administrative services and costs attributable to the Company and the Company
Products. The Services Agreement shall provide that services performed on behalf
of the Company shall be provided at cost.
-12-
ARTICLE 8
TRANSFERS OF INTERESTS
8.1 Restrictions on Transfers.
Except as expressly permitted or required by this Agreement, no Party shall
Transfer all or any portion of its Membership Interest or any rights therein
without the unanimous consent of the Parties. Any Transfer or attempted Transfer
by any Party in violation of the preceding sentence shall be null and void and
of no force or effect whatsoever. Each Party hereby acknowledges the
reasonableness of the restrictions on Transfer imposed by this Agreement in view
of the purposes of this Agreement and the relationship of the Parties.
Accordingly, the restrictions on Transfer contained herein shall be specifically
enforceable. Each Party hereby further agrees to hold the Company and each other
Party (and each other Party's successors and assigns) wholly and completely
harmless from any cost, liability, or damage (including, without limitation,
liabilities for income taxes and costs of enforcing this indemnity) incurred by
any of such indemnified Persons as a result of a Transfer or an attempted
Transfer in violation of this Agreement.
-13-
8.2 Permitted Transfers.
(a) Subject to the conditions and restrictions set forth in this Section 8.2 and
in Section 8.4, a Party shall have the right to Transfer all (but not less than
all) of its Membership Interest by means of a Permitted Transfer.
(b) A "Permitted Transfer" is:
(i) Any Transfer by a Party of all of its Membership Interest to a wholly-owned
subsidiary of such Party;
(ii) Any Transfer made pursuant to the Option Agreement; and
(iii) Any Transfer made pursuant to Section 8.3 of this Agreement.
8.3 Purchase and Sale Rights.
(a) In the event that IAHC has the right to exercise its Put Right pursuant to
Section 3.2 or 5.3, IAHC shall have the right to require Lakeside to purchase
(the "Put Right") all but not less than all of the Membership Interest of IAHC.
IAHC may exercise the Put Right by providing written notice to Lakeside of its
intent to sell all of IAHC's Membership Interest to Lakeside. The notice shall
include a closing date for such sale which shall be at least ninety (90) and no
more than one hundred and twenty (120) days from the date of such notice. At the
closing date, Lakeside shall purchase IAHC's right, title and interest in the
Company at a price equal the lesser of the following two numbers:
(i) The product of the Percentage Interest represented by IAHC's Membership
Interest and the shareholders' equity of the Company as determined in accordance
with GAAP and as of the last day of the calendar quarter ended immediately prior
to the date of the Put Right exercise notice; or
(ii) The sum total of IAHC's capital contributions to the Company.
If Lakeside fails to purchase IAHC's Membership Interest in connection with an
exercise of the Put Right, such failure shall constitute an Event of Default
under Section 12.1 and IAHC shall be the Non-Defaulting Party.
(b) In the event that Lakeside has the right to exercise its Call Right,
Lakeside shall have the right to purchase (the "Call Right") all but not less
than all of IAHC's Membership Interest pursuant to Section 3.2 or 5.3. Lakeside
may exercise the Call Right by providing written notice to IAHC of its intent to
purchase all of IAHC's Membership Interest. The notice shall include a closing
-14-
date for such sale which shall be at least ninety (90) and no more than one
hundred and twenty (120) days from the date of such notice. At the closing date,
Lakeside shall purchase IAHC's right, title and interest in the Company at a
price equal the lesser of the following two numbers:
(i) The product of the Percentage Interest represented by IAHC's Membership
Interest and the shareholders' equity of the Company as determined in accordance
with GAAP and as of the last day of the calendar quarter ended immediately prior
to the date of the Put Right exercise notice; or
(ii) The sum total of IAHC's capital contributions to the Company.
8.4 General Provisions Regarding Transfers.
(a) A Transfer otherwise permitted under this Article 8 shall not take effect
unless and until the following conditions are satisfied:
(i) The transferor and transferee shall execute such documents and instruments
of conveyance and assumptions as may be necessary or appropriate in the opinion
of counsel to the Company to effect such Transfer and to confirm the
transferee's agreement to be bound by the provisions of this Agreement and
assumption of all monetary obligations of the transferor Party with respect to
the Membership Interest being transferred and the transferor Party's agreement
to guarantee the prompt payment and performance of such assumed obligations.
(ii) The transferee shall deliver such assurances as may be necessary or
appropriate in the opinion of counsel to the Company to confirm such Transfer
and that such transferor Party remains liable to perform all monetary
obligations with respect to such interest.
(iii) The Company shall receive, prior to such Transfer, if it deems it
necessary, an opinion of counsel satisfactory to the Company confirming that
such Transfer will not terminate the Company for federal income tax purposes.
(iv) The transferor and transferee shall furnish the Company with the
transferee's taxpayer identification number, sufficient information to determine
the transferee's initial tax basis in the interest transferred, and any other
information reasonably necessary to permit the Company to file all required
federal and state tax returns and other legally required information statements
or returns. Without limiting the generality of the foregoing, the Company shall
not be required to make any distribution otherwise provided for in this
Agreement with respect to any transferred interest until it has received such
information.
-15-
(b) The requirements of Section 8.4(a) shall not apply to an adjustment of
Percentage Interests pursuant to Section 8.3 or a Transfer of Membership
Interests pursuant to Section 8.3.
(c) The Parties intend that the Permitted Transfer of an interest in the Company
shall not cause the dissolution of the Company under the Delaware Act; however,
in the event of any such dissolution, the Parties shall cause the Company to be
reformed and shall make reasonably best efforts to continue the business of the
Company under this Agreement as if no such dissolution had occurred.
(d) In the event any Membership Interest in the Company is transferred in
accordance with the terms of this Agreement, the transferee shall succeed to the
Capital Account of the transferor to the extent it relates to the transferred
Membership Interest.
ARTICLE 9
COMPLIANCE WITH LAW
9.1 General Compliance.
IAHC and Lakeside in the performance of their obligations under this Agreement
and the Company in the conduct of its Business shall comply in all respects with
all applicable laws and regulations of the United States of America (including
all applicable state and federal securities laws) and of any country in which
the Company does business. Each of the Parties shall cooperate with the other
and with the Company in meeting this obligation.
ARTICLE 10
[Intentionally Omitted]
-16-
ARTICLE 11
INDEMNIFICATIONS
11.1 Parties' Indemnification.
No Party has or will have any authority to act for or to assume any obligation
or responsibility on behalf of another Party or the Company except as expressly
provided in this Agreement or in a writing signed by both Parties. In addition
to the other remedies specified in this Agreement, each Party agrees to
indemnify and hold each other Party harmless from and against any claim, demand,
loss, damage, liability or expense of any kind or nature whatsoever, including
reasonable outside attorneys' fees, incurred by or against such other Party and
arising out of or resulting from any action taken by the indemnifying Party in
violation of the first sentence of this Section 11.1
11.2 Indemnification as to Actions or Omissions in Company's Business.
Except to the extent otherwise provided in this Agreement, the Parties will
cause the Company to indemnify, defend and hold harmless each Party and their
respective officers, directors, employees and agents (collectively,
"Indemnitees") from any loss, liability or damage incurred or suffered by any
such Indemnitees with respect to any third-party claim by reason of any act
performed or omitted to be performed, or alleged to have been performed or
omitted, by such Indemnitees in connection with the Business of the Company
(including any judgment, award, settlement, costs and other expenses, and
reasonable outside attorneys' fees incurred in connection with the defense of
any actual or threatened claim or action based on any such act or omission);
provided that, if an Indemnitee's action or omission to act caused the loss,
liability or damage incurred or suffered, such Indemnitee may not receive
indemnification or avoid liability by reason of this provision with respect to
any claim as to which the Indemnitee is adjudged by a final nonappealable
decision of a court of competent jurisdiction to have acted in or with fraud,
bad faith or willful misconduct. Any such indemnification will be made promptly
following the fixing of the loss, liability or damage incurred or suffered by
final nonappealable decision, settlement, contract or otherwise (except that any
attorneys' fees and the expenses of defense may be paid as incurred).
11.3 Cross Indemnification.
As between the Parties, no Party will be liable or bear responsibility for more
than its proportionate share (based on its Percentage Interest at the time such
liability or obligation arises) of each of the liabilities and obligations of
the Company. In the event that either Party is required to pay, discharge or
otherwise bear responsibility for any amount of any liability or obligation of
the Company in excess of such Party's proportionate share (otherwise than by
reason of such Party's violation of this Agreement, fraud, bad faith or willful
-17-
misconduct), the other Party agrees to indemnify, hold harmless and reimburse
such Party against and for such other Party's proportion share of such excess.
It is the intention of the Parties that, following the operation of this
Section, each Party will have borne exactly its proportionate share of the
liability or obligation of the Company at issue.
11.4 Indemnifications by Lakeside.
Lakeside shall indemnify, defend and hold harmless IAHC and keep IAHC
indemnified against any loss, damage, costs or expense (including reasonable
attorneys' fees) suffered or incurred by IAHC as the result of any action,
claim, demand or proceeding commenced by any Person due to:
(a) Lakeside's breach of this Agreement; or
(b) Lakeside's willful misconduct in the performance of its obligations under
this Agreement.
11.5 Indemnifications by IAHC.
IAHC shall indemnify, defend and hold harmless Lakeside and keep Lakeside
indemnified against any loss, damage, costs or expense (including reasonable
attorneys' fees) suffered or incurred by Lakeside as the result of any action,
claim, demand or proceeding commenced by any Person due to:
(a) IAHC's breach of this Agreement; or
(b) IAHC's willful misconduct in the performance of its obligations under this
Agreement.
11.6 Procedure for Indemnification.
(a) Each Party (the "Indemnified Party") shall give prompt written notice to the
other Party (the "Indemnifying Party") of any claim or event known to it which
does or may give rise to a claim by the Notifying Party based on the
indemnification provisions of this Agreement, stating the nature and basis and
said claim or events and the amounts thereof, to the extent known. Such notice
shall be a condition precedent to any indemnification obligation of the Notified
Party. Notwithstanding the foregoing, failure to give reasonably prompt written
notice pursuant to this Section 11.6 shall not defeat a claim made pursuant the
indemnification provisions of this Agreement, except to the extent that the
Notified Party can establish that it has been harmed by such delay.
(b) In the event of any claim, action, suit or proceeding made or brought
against an Indemnified Party, the Indemnified Party shall give the Indemnifying
-18-
Party written notice of such claim, action, suit or proceeding as described in
Section 11.6(a), with a copy of the claim, process and legal pleadings with
respect thereto. After notification, the Indemnifying Party may participate in
and assume the defense thereof, with counsel reasonably satisfactory to such
Indemnified Party at the time of such assumption. If the Indemnifying Party
assumes the defense of the claim, action, suit or proceeding, the Indemnified
Party shall nonetheless have the right to employ its own counsel and such
counsel may participate in such action, but the fees and expenses of such
counsel shall be at the expense of the Indemnified Party, when and as incurred,
unless (a) the employment of counsel by the Indemnified Party has been
authorized by the Indemnifying Party, or (b) the Indemnifying Party shall not in
fact have employed counsel to assume the defense of such claim, action, suit or
proceeding reasonably satisfactory to the Indemnified Party. If clause (b) of
the preceding sentence applies, then counsel for the Indemnified Party shall
have the right to direct the defense of such claim, action, suit or proceeding
on behalf of the Indemnified Party. The Parties shall keep each other fully
informed of such claim, action, suit or proceeding at all stages thereof whether
or not both Parties are represented by its own counsel.
11.7 Survival.
The provisions of this Article 11 shall survive dissolution and liquidation of
the Company and shall survive termination of this Agreement for any reason.
ARTICLE 12
EVENTS OF DEFAULT
12.1 Events of Default.
A Party ("the Defaulting Party") shall be in default under this Agreement, and
shall thereby give rise to the rights and remedies of the other Party ("the
Non-Defaulting Party") and other consequences specified in Section 12.2, if any
of the following events (each such event, an "Event of Default") occurs:
(a) if the Defaulting Party fails to duly and punctually perform or comply with
any of its material obligations under this Agreement and does not remedy such
failure within 30 days from the earlier of:
(i) the date on which the Defaulting Party became aware of such failure; and
(ii) receipt of written notice from the Non-Defaulting Party requiring it to do
so;
-19-
(b) if any representation made by the Defaulting Party in this Agreement is
incorrect or is misleading in a material respect and the Defaulting Party does
not remedy such defect within 30 days from the earlier of:
(i) the date on which the Defaulting Party became aware of such defect; and
(ii) receipt of written notice from the Non-Defaulting Party requiring it to do
so;
(c) the Defaulting Party becomes or is deemed to be insolvent, bankrupt or
unable to pay its debts; or a resolution is passed for, or an application is
made for an order of, winding up the Defaulting Party; or the Defaulting Party
enters into bankruptcy, reorganization or liquidation proceedings however
described, whether voluntary or involuntary, under the U.S. Bankruptcy Code,
state insolvency law, or the law of any country or jurisdiction; or the
Defaulting Party makes an assignment for the benefit of creditors; or any action
is taken by or against the Defaulting Party the purpose or effect of which is or
may be to relieve the Defaulting Party from the payment of its debts; or the
Defaulting Party has a trustee, receiver, administrator, or liquidator appointed
for all or some of its assets; or the Defaulting Party takes or suffers any
similar action in consequence of debt, bankruptcy or insolvency in any
jurisdiction, provided that this paragraph shall not apply to a bona fide
re-organization of the Defaulting Party while solvent on terms approved by the
other Party (such approval not to be unreasonably withheld or delayed);
(d) without the prior written consent of the Non-Defaulting Party or as
otherwise provided in this Agreement, the Defaulting Party assigns all or any
part of its rights or interests under this Agreement, or the Defaulting Party
gives notice of its withdrawal from the Company, or undertakes a Resignation (as
that term is defined in the LLC Agreement); or
(e) the Defaulting Party is prevented by any law from carrying out any of its
material obligations under this Agreement.
12.2 Remedies Upon Default.
The rights and remedies of the Non-Defaulting Party and other consequences that
are triggered by the occurrence of any and every Event of Default are as
follows:
(a) The Non-Defaulting Party may ▇▇▇ the Defaulting Party for compensatory
damages, but in no event shall a Defaulting Party be liable for consequential
damages;
-20-
(b) Notwithstanding any other provision of this Agreement, the Non-Defaulting
Party shall be entitled to fill unilaterally all vacancies that may occur on the
Board of Managers until the Event of Default is rectified;
(c) Notwithstanding any other provision of this Agreement, the Non-Defaulting
Party shall be entitled to fill unilaterally any vacancies that may occur in any
of the officer positions of the Company;
(d) The Non-Defaulting Party may order the dissolution of the Company in
accordance with Article 14 of the LLC Agreement; and
(e) Exercise any other rights and remedies available to the Non-Defaulting Party
at law or in equity.
The rights and remedies specified in this Section 12.2 are cumulative.
ARTICLE 13
TERMINATION
13.1 Passage of Time.
In the event that the Company has not been dissolved, wound up or liquidated on
the date specified in Section 2.4, then this Agreement will terminate on that
date and the Company shall be dissolved in accordance with the provisions of the
LLC Agreement.
13.2 Early Termination.
If not previously terminated, this Agreement shall terminate on the first date
that one of the Parties no longer owns a Membership Interest.
-21-
13.3 Dissolution, Liquidation, and Winding Up Generally.
Any dissolution, liquidation or winding up of the Company shall be done in
accordance with the terms of the LLC Agreement.
ARTICLE 14
MISCELLANEOUS
14.1 Notices.
Any notice, payment, demand, or communication required or permitted to be given
by any provision of this Agreement shall be in writing and (a) personally
delivered, including over-night delivery by a courier service, (b) sent by
postage prepaid registered first-class airmail or (c) transmitted by telecopy as
follows:
If to IAHC:
International Assets Holding Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇...
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Diego ▇. ▇▇▇▇▇▇
If to Lakeside:
Lakeside Investments, LLC
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
14.2 Binding Effect.
Except as otherwise provided in this Agreement, every covenant, term, and
provision of this Agreement shall be binding upon and inure to the benefit of
the Parties and their respective legal representatives, and permitted
successors, transferees, and permitted assigns.
14.3 Construction.
-22-
Every covenant, term, and provision of this Agreement shall be construed simply
according to its fair meaning and not strictly for or against any Party. The
terms of this Agreement are intended to embody the economic relationship among
the Parties and shall not be subject to modification by, or be conformed with,
any actions by the Internal Revenue Service except as this Agreement may be
explicitly so amended and except as may relate specifically to the filing of tax
returns.
14.4 Headings.
Article headings, Section headings, and other headings contained in this
Agreement are for reference purposes only and are not intended to describe,
interpret, define, or limit the scope, extent, or intent of this Agreement or
any provision of this Agreement.
14.5 Severability.
Every provision of this Agreement is intended to be severable. If any term or
provision hereof is illegal or invalid for any reason whatsoever, such
illegality or invalidity shall not affect the validity or legality of the
remainder of this Agreement.
14.6 Further Action.
Each Party agrees to perform all further acts and execute, acknowledge, and
deliver any documents which may be reasonably necess ary, appropriate,
ordesirable to carry out the provisions of this Agreement.
14.7 Governing Law.
The laws of the State of New York, excluding the rules on conflict of laws and
choice of law, shall govern the validity of this Agreement, the construction of
its terms, and the interpretation of the rights and duties of the Parties.
14.8 Counterpart Execution.
This Agreement may be executed in several counterparts, each of which shall be
an original, and such counterparts shall together constitute but one and the
same instrument.
-23-
14.9 Force Majeure.
If an event of Force Majeure occurs, a Party's contractual obligations affected
by such an event shall be suspended during the period of delay caused by the
Force Majeure and shall be automatically extended, without penalty, for a period
equal to such suspension. The Party claiming Force Majeure shall promptly inform
the other Party in writing and shall furnish sufficient proof of the occurrence
and duration of such Force Majeure. The Party claiming Force Majeure shall also
use all reasonable endeavors to terminate the Force Majeure. In the event of
Force Majeure, the Parties shall immediately consult with each other in order to
find an equitable solution and shall use all reasonable endeavors to minimize
the consequences of such Force Majeure.
14.10 Entire Agreement.
This Agreement and the schedules and exhibits hereto and the other agreements
referred to herein constitute the entire agreement between the Parties
pertaining to the Business and the Company and supersede all previous
communications, agreements and understandings between the Parties relating to
the Company. Neither Party has entered into this Agreement in reliance upon any
representation, warranty or undertaking of the other Party that is not set out
or referred to in this Agreement. This Agreement may be amended or modified only
by a written agreement signed by all of the Parties.
14.11 Conflict with LLC Agreement.
Notwithstanding anything in this Agreement or the LLC Agreement to the contrary,
in the event of any conflict between this Agreement and the LLC Agreement, the
provisions of this Agreement shall control.
14.12 Confidentiality.
-24-
(a) Subject to the requirements of applicable law, each Party shall maintain in
confidence the terms and existence of this Agreement and all confidential
information identified as such received from the other, whether of a commercial
or technical nature, shall use such information only for the benefit of the
Company, and shall not disclose any such information to a third party (other
than such Party's officers, directors, shareholders, partners and professional
advisers) or make any unauthorized use thereof. Each Party shall treat such
information with the same degree of care against disclosure or unauthorized use
which it affords to its own confidential information. The obligation of
confidential treatment shall not apply to any information that (i) has become
generally available in the public domain, (ii) was in the receiving Party's
possession prior to disclosure, (iii) was independently developed by the
receiving Party, (iv) was received from a third party who had a right to
disclose such information, or (v) is required to be disclosed to comply with
applicable laws, rules, regulations or court orders; provided, that with respect
to any disclosure of information pursuant to this Section 14.12(a)(v) each Party
will consult with the other Party prior to making any such disclosure.
(b) The Parties acknowledge that the Company will receive from IAHC and IAHC's
Affiliates and Lakeside and Lakeside's Affiliates certain proprietary
information regarding the investment products developed prior to this Agreement
by the Parties (the "Know-How"). The Parties and the Company acknowledge and
agree that the Know-How of each Party is proprietary to such Party and is
confidential. The Parties shall cause the Company to keep all Know-How in
confidence, and shall not use such Know-How other than in the normal course of
the Business. Except as permitted herein or as expressly permitted by the
Parties in writing, the Company shall not, directly or indirectly, disclose,
divulge, copy, furnish to or make accessible to any third party any Know-How.
Notwithstanding the foregoing sentence, the Company may disclose the Know-How to
those employees or officers of the Company who require such information in
connection with the operation of the Business. The Parties shall cause the
Company to ensure that such employees or officers are aware of and comply with
the confidentiality obligation imposed on the Company under this Agreement. The
Company's obligation of confidential treatment of the Know-How shall not apply
to any information that (i) has become generally available in the public domain,
(ii) was in the Company's possession prior to the date hereof, (iii) was
independently developed by the Company, (iv) was received from a third party who
had a right to disclose such information, or (v) is required to be disclosed to
comply with applicable laws, rules, regulations or court orders; provided, that
with respect to any disclosure of information pursuant to Section 14.12(b)(v)
the Parties and the Company will consult with each other prior to the Company
making any such disclosure.
(c) In order to avoid the disclosure or misappropriation of the Know-How, the
Parties shall cause the Company to maintain appropriate security measures which
are no less stringent than those security measures used to safeguard the
Company's proprietary information and in any event that are no less stringent
-25-
than are reasonably necessary to protect that the Know-How from unauthorized
disclosure. The Parties shall cause the Company to promptly notify each Party of
any unauthorized disclosure of the Know-How and take such action as the Party
affected by such disclosure reasonably requests to prevent any further
unauthorized disclosure of the Know-How.
(d) This Section 14.12 will survive termination of this Agreement for any
reason.
14.13 Due Authorization.
Each of the Parties represents and warrants that it has all requisite corporate
and other power and authority to enter into and perform its obligations under
this Agreement, and that the execution, delivery and performance of this
Agreement by such Party has been duly authorized by all necessary corporate and
other action on the part of such Party.
14.14 No Third Party Rights.
The representations, warranties, covenants and agreement contained in this
Agreement are for the sole benefit of the Parties and shall not be deemed or
construed as in any way creating or conferring any rights or obligations on any
third party.
14.15 Dispute Resolution.
Any disputes arising out of, relating to, or arising in connection with this
Agreement or any of the documents or agreements attached hereto as exhibits
(including without limitation the LLC Agreement) shall be finally settled by
arbitration in accordance with the Commercial Arbitration Rules and the
Supplementary Procedures for Commercial Arbitration of the American Arbitration
Association (except insofar as those rules and procedures are modified by the
terms of this paragraph). Each of the Parties shall appoint one arbitrator, and
the two arbitrators thus selected shall designate a third. If either of the
Parties fails to appoint its arbitrator within sixty (60) days after receipt of
notice of the appointment by the other of its arbitrator, or if the two
arbitrators fail to appoint a third within sixty (60) days, then the American
Arbitration Association will have the power, on the request of either party, to
make the appointments. The arbitration will be held in New York City unless both
Parties agree otherwise; and it shall be held as promptly as possible at such
time as the arbitrators may determine. The arbitration shall be conducted in the
English language. The decision of a majority of the arbitrators will be final
and binding upon the parties hereto, and the expenses of the arbitration will be
shared equally between the parties. The arbitration proceedings and all evidence
provided by both parties shall be kept secret and confidential and not disclosed
to any person not a party to the arbitration. Judgment upon the arbitration
award may be entered in any court of competent jurisdiction, or application may
be made to such court for a judicial acceptance of the award and an order of
enforcement, as the case may be. Anything to the contrary in this Agreement
-26-
notwithstanding, neither Party shall be prevented from applying to a court of
competent jurisdiction for such preliminary or interim injunctive relief, or
relief in aid of arbitration, as may be necessary to preserve or restore the
status quo, and neither Party shall be prevented from impleading any other Party
into a lawsuit or other legal proceeding brought by a third person or entity
where the impleading Party has a claim or cause of action against the impleaded
Party for contribution, for indemnity, or otherwise related to or arising out of
the same transaction or occurrence as is the subject of the third person or
entity's lawsuit or proceeding.
IN WITNESS WHEREOF, the Parties have entered into this Joint Venture Agreement
as of the day first above set forth.
International Assets Holding Corp.
_____________________________
By: /s/ Diego ▇. ▇▇▇▇▇▇
Its: Chairman & CEO
Lakeside Investments, LLC
_____________________________
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Its: President
-27-
