10.42
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT made as of January 1, 2003 by and between
VFINANCE, INC., a Delaware corporation (the "Company"), and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
("Employee") domiciled at ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
WITNESSETH:
WHEREAS, Employee wishes to be employed by the Company with the
duties and responsibilities as hereinafter described, and the Company desires to
assure itself of the availability of Employee's services in such capacity.
NOW THEREFORE, in consideration of the foregoing and for other
good and valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the Company and Employee hereby agree as follows:
1. EMPLOYMENT. The Company hereby agrees to employ Employee, and Employee hereby
agrees to serve the Company, upon the terms and conditions hereinafter set
forth.
2. TERM. The employment of Employee by the Company pursuant to this Agreement
shall be for an eighteen month (18) period commencing on the date hereof and
shall automatically be extended for additional one year periods on the eighteen
(18) month anniversary date of this Agreement (July 1, 2004) and each annual
anniversary date thereafter (July 1 of each year beginning in 2005) unless the
Company or the Employee has provided notice of non-renewal ninety (90) days
prior an anniversary date (the "Term"). For example, in the event the Company
has provided notice of non-renewal 90 days prior to July 1, 2004, there will be
only ninety (90) days remaining in the Term; in the event neither the Employee
nor the Company provided such notice ninety (90) days prior to July 1, 2004,
then the Term shall be extended to July 1, 2005 so that on July 1, 2004, the
total Term is one (1) year.
3. DUTIES. Employee shall, serve as, and have all power and authority inherent
in the offices of President, vFinance Investments, Inc., Retail Brokerage
Division reporting to the CEO and Chairman of vFinance Investments, Inc.
("Management"). The Employee shall be responsible for those areas in the conduct
of the business reasonably assigned to him consistent with responsibility for
the over-all growth and profitability of the retail brokerage operations of the
Company including trading to the extent it impacts upon the retail brokerage
operation and including retail investment banking operations. Employee shall
devote on a full time basis his business time and efforts to the business of the
Company; provided, however, that it is understood and agreed that, while
Employee may devote time to other business matters in which he has an interest
and may be an officer or director of other companies (including JSM Capital
Holding, Corp.) that have no conflicts of interest with the Company, in the
event of a conflict, Employee's first and primary responsibility shall be to the
full time performance of his duties for the Company. The Company understands
that Employee has also executed an Independent Contractor Agreement with the
Company, and the Company understands and agrees that Employee will also be
performing services as an Independent Contractor. The Company agrees that the
performance of such services as an Independent Contractor shall not be deemed a
conflict of interest hereunder provided that the Employee continues to
diligently perform his duties hereunder. Employee agrees that in the performance
of his duties hereunder, the employee in the routine conduct of his duties will
be performed at either the JSM Capital Holding, Corp. ("JSM") offices in New
York, New York or the Company's office located in Boca Raton, Florida. The
Employee shall be reimbursed for reasonable travel, lodging, and meal expenses
for work and travel to Boca Raton, Florida. The Company recognizes that from
time to time the employee in his reasonable judgment may perform services
required of him hereunder, off-site by means of telephone, facsimile, electronic
mail or other appropriate means.
4. COMPENSATION AND OTHER PROVISIONS. Employee shall be entitled to the
compensation and benefits hereinafter described in subparagraphs (a) through (e)
(such compensation and benefits being hereinafter referred to as ("Compensation
Benefits").
(a) BASE SALARY. The Company shall pay to Employee a base salary of
$125,000 per annum for the first year of this Agreement ("Base Salary").
The Base Salary and Employee's other compensation will be reviewed at
least annually and may be increased (but not decreased) from time to time
as Management may determine.
(b) PARTICIPATION IN BENEFIT PLANS. During the Term, Employee shall be
eligible to participate in all employee benefit plans and arrangements now
in effect or which may hereafter be established, including, without
limitation, all life, group insurance and medical care plans and all
disability, retirement and other employee benefit plans of the Company.
Additionally, Employee shall be added as an insured to any director and
officer insurance policy that the Company hereafter procures.
(c) OTHER PROVISIONS. Employee shall be entitled to four (4) weeks paid
vacation per annum. Employee shall be reimbursed for all reasonable
expenses incurred by him in the performance of his duties, including, but
not limited to, cellular telephone, entertainment, travel and other
expenses deemed reasonably necessary by his direct superiors.
(d) DISCRETIONARY BONUSES. Employee shall be entitled to receive annual
and/or interim cash bonuses and/or other bonuses when and in such amounts
as may be determined by Management in its sole and reasonable discretion
based upon Employee's performance, the Company's performance and/or other
factors; provided, that, Management shall meet at least annually to review
Employee's bonus entitlements.
(e) INCENTIVE COMPENSATION. Employee shall receive quarterly
incentive compensation payments as more fully described on
Schedule A attached hereto.
(f) STOCK OPTIONS. On even date herewith, the Company and Employee shall
enter into the Stock Option Agreement attached hereto as Exhibit B
pursuant to which the Company shall grant to Employee certain options to
purchase common stock of the Company upon such terms and conditions set
forth therein.
5. SEVERANCE AND CHANGE OF CONTROL PROVISIONS. Upon the occurrence of a
Triggering Event (as hereinafter defined), Employee shall be entitled to the
immediate receipt of Severance Payments and Benefits (as hereinafter defined)
from the Company in accordance with the terms hereinafter set forth.
(a) TRIGGERING EVENT. The occurrence of any of the following events shall be
defined as a "Triggering Event" for purposes hereof:
(1) The Company's termination of Employee's employment (other
than for Cause (as hereinafter defined)) at any time prior to
the expiration of the Term or within ninety days (90)
following a Change of Control (as hereinafter defined);
(2) The voluntary resignation of Employee for any reason
whatsoever within ninety (90) days following a Change of
Control;
(3) The voluntary resignation of Employee for "good reason, "
which for purposes hereof, shall be on written notice to the
Company and shall include, without limitation, (i) a demotion,
(ii) a reduction in salary, benefits, bonuses, incentives or
perquisites, or (iii) the relocation of Employee outside of
New York City, New York, (iv) the breach of the Independent
Contractor Agreement described in paragraph 12 by the Company;
or (v) the breach of the Branch Agreement (as defined herein
below) by the Company; or
(4) The death or Disability of the Employee(as defined herein).
(b) CHANGE OF CONTROL. For purposes of this Agreement, the term "Change of
Control" shall mean the occurrence of any of the following events:
(1) Forty percent (40%) or more of the Company's voting
stock shall be acquired by any person (other than
Employee), entity or affiliated group;
(2) An unapproved change to the majority control of the
Company's Board of Directors or a change in the majority
of the senior management of the Company;
(3) Any merger, consolidation or business combination (i.e. a
Transaction) where more than fifty percent (50%) of the
Company's voting stock or more than fifty percent (50%)
of the merged and or consolidated business entity (if the
Company is not the surviving entity) shall be, as the
result of the Transaction, acquired by any person (other
than Employee), entity or affiliated group;
(4) The sale of all or substantially all of the Company's
assets.
(c) SEVERANCE PAYMENTS AND BENEFITS. For purposes of this Agreement, the term
"Severance Payments and Benefits" shall mean:
(1) Employee shall be entitled to a payment equal to the
Employee's highest annual Base Salary received by
Employee in respect of any year within the three (3) year
period preceding the Triggering Event plus all bonuses
and incentives which Employee is entitled to on the date
the Triggering Event occurred (with respect to all such
bonus amounts that would have accrued for fiscal quarters
occurring prior to the Triggering Event); such amount to
be paid to Employee over a period of twelve months in 12
equal and consecutive monthly payments.
(2) All stock options, warrants, other stock appreciation
rights and other similar securities shall become
immediately and fully vested and all conditions
applicable to all contingently issued warrants, stock
options, appreciation rights and other similar securities
shall be deemed waived by the Company;
(3) All benefits applicable to Employee and his family
members as described in Sections 5(a) and (b) of the
Agreement shall continue for a period of one (1) year
following the Triggering Event or through the expiration
of the Term (as if the Triggering Event had not
occurred), whichever is later;
(4) In the event that Severance Payments and Benefits are
deemed to be "excess parachute payments" as defined under
Section 280G of the Internal Revenue Code, then the
Company shall pay to Employee an additional lump sum cash
payment as shall be necessary to provide Employee with
the same "after-tax" compensation and benefits as if no
such excise tax had been imposed.
(5) The Company shall be required to pay any and all
attorneys' fees and costs that Employee may incur in
connection with the enforcement of his rights under this
Agreement or any dispute or settlement in connection a
court of law determines that the Employee is the
prevailing party. If the Employee seeks enforcement of
his rights under this Agreement and a court of law
determines that the Employee is not the prevailing
party, then the Employee shall pay the Company any and
all attorneys' fees and costs that the Company may incur
in connection therewith;
(6) Severance Payments and Benefits will not be subject to
mitigation in any respect.
(d) STOCK OPTIONS, WARRANTS AND STOCK APPRECIATION RIGHTS. Notwithstanding the
foregoing, all stock options, warrants, stock appreciation rights and other
similar securities shall immediately vest upon the occurrence of a Change of
Control and at such time all conditions applicable to contingently issued
options, warrants, stock appreciation rights and other securities shall be
deemed waived by the Company.
6. TERMINATION. Employee's employment hereunder shall terminate as a result of
any of the following events:
(a) Employee's death;
(b) Employee shall be unable to perform his duties hereunder by reason
of illness, accident or other physical or mental disability for a
continuous period of at least nine months or an aggregate of
twelve months during any continuous eighteen month period
("Disability");
(c) Voluntary termination by Employee (other than in respect of a
Triggering Event) provided that employee provides the Company one
ninety (90) day advance written notice of termination; or
(d) For Cause, where "Cause" shall mean: (i) final non-appealable
adjudication of Employee of a felony; (ii) consent, order or
decree from the Securities and Exchange Commission or the NASD
barring employing from the securities business; (iii) the
determination of the Board (after written notice has been given to
the Employee with a thirty day cure period) that Employee has
engaged in material intentional misconduct; (iv) the gross neglect
of his duties (which has not been cured within the applicable cure
period), which has a continuing material adverse effect on the
business of the Company; (v) the breach of the Independent
Contractor Agreement described in paragraph 12 by the Employee; or
(vi) the breach of the Branch Agreement by JSM Capital Holding
Corp or Employee.
(e) The occurrence of a Triggering Event as set forth in Paragraph 5
(a) above.
Any termination pursuant to subparagraph (b), (c) (d) or (e) of
this Section shall be communicated by a written notice ("Notice of
Termination"), such notice to set forth with specificity the
grounds for termination if the result of "Cause". Employee's
employment under this Agreement shall be deemed to have terminated
as follows: (i) if Employee's employment is terminated pursuant to
subparagraph (a) above, on the date of his death; (ii) if
Employee's employment is terminated pursuant to subparagraph (b)
(d) or (e) above, on the date on which Notice of Termination is
given; and (iii) if Employee's employment is terminated pursuant
to subparagraph (c) above, ninety (90) days after the date on
which a Notice of Termination is given. The date on which
termination is deemed to have occurred pursuant to this paragraph
is hereinafter referred to as the "Date of Termination".
7. PAYMENTS ON TERMINATION. In the event that Employee's employment is
terminated pursuant to Section 6 above, the Company shall pay to Employee his
full Base Salary through the Date of Termination together with all incentive
compensation, benefits and other compensation, if any, due and owing as of that
date, plus any Severance and Benefit Payments to which Employee may be entitled
hereunder pursuant to Section 5(c) above.
8. BOARD OF DIRECTORS. The Company shall cause Employee to be appointed as an
observer to the Board of Directors of the Company during the Term. Employee
shall be given notice of all Board meetings as if he were a director. The Board
reserves the right at its sole discretion to exclude Employee from attending any
meetings or participating in any conversations where the purpose of which is to
discuss the Employee's performance pursuant under this Agreement.
9. LIFE INSURANCE. If requested by the Company, Employee shall submit to such
physical examinations and otherwise take such actions and execute and deliver
such documents as may be reasonably necessary to enable the Company to obtain
life insurance on the life of Employee for the benefit of the Company.
10. REPRESENTATIONS AND WARRANTIES. Employee represents and warrants to the
Company that he is under no contractual or other restriction or obligation that
would prevent the performance of his duties hereunder or interfere with the
rights of the Company hereunder.
11. DISCLOSURE AND PROTECTION OF CONFIDENTIAL INFORMATION.
(a) For purposes of this Agreement "Confidential Information" means
knowledge, information and material which is proprietary to the
Company, of which Employee may obtain knowledge or access
through or as a result of his employment by the Company (including
information conceived, originated, discovered or developed in
whole or in part by Employee). Confidential Information
includes, but is not limited to, (i) technical knowledge,
information and material such as trade secrets, processes,
formulas, data, know-how, improvements, inventions, computer
programs, drawings, patents, and experimental and development
work techniques, and (ii) marketing and other information, such
as supplier lists, customer or client lists, marketing and
business plans, business or technical needs of customers,
consultants, licensees or suppliers and their methods of
doing business, arrangements with customers, consultants,
licensees or suppliers, manuals and personnel records or data.
Confidential Information also includes any information described
above which the Company obtains from another party and which the
Company treats as proprietary or designates as confidential,
whether or not owned or developed by the Company. Notwithstanding
the foregoing, any information which is or becomes available
to the general public otherwise than by breach of this Section 11
shall not constitute Confidential Information for purposes of
this Agreement.
(b) During the term of this Agreement and thereafter, Employee agrees
to hold in confidence all Confidential Information and not to use
such information for Employee's own benefit or to reveal, report,
publish, disclose or transfer, directly or indirectly, any
Confidential Information to any person or entity, or to utilize
any Confidential Information for any purpose, except in the course
of Employee's work for the Company.
(c) Employee will abide by any and all security rules and regulations,
whether formal or informal, that may from time to time be imposed
by the Company for the protection of Confidential Information, and
will inform the Company of any defects in, or improvements that
could be made to, such rules and regulations.
(d) Employee will notify the Company in writing immediately upon
receipt of any subpoena, notice to produce, or other compulsory
order or process of any court of law or government agency if such
document requires or may require disclosure or other transfer of
Confidential Information.
(e) Upon termination of employment, Employee will deliver to the
Company any and all records and tangible property that contain
Confidential Information that are in his possession or under his
control.
12. COVENANT NOT TO COMPETE.
(a) In consideration for the Company entering into this Agreement and
except as provided below, Employee covenants and agrees that
during the Term and for a one (1) year period thereafter, Employee
will not, without the express prior written consent of the
Company, directly or indirectly, compete with the business of the
Company anywhere within the United States of America. Employee
will undertake no activities that may lead Employee to
compete with or to acquire rival, conflicting or
antagonistic interests to those of the Company with respect to
the business of the Company, whether alone, as a partner, or
as an officer, director, employee, independent contractor,
consultant or shareholder holding 5% or more of the outstanding
voting stock of any other corporation, or as a trustee,
fiduciary or other representative of any other person or entity.
Anything herein to the contrary notwithstanding and except as
provided in Sections 12 (e), (f) and (g) below, the Company
acknowledges and agrees that the Employee has executed an
Independent Contractor Agreement" ("IC Agreement") as
an "Independent Contractor" with the Company effective as of
December 19, 2002 and nothing herein contained shall operate to
restrict the Employee from conducting the business of the
Independent Contractor (either as an independent
contractor of the Company, as an independent contractor of
another company, or as an independent broker-dealer) during, or
following the termination of this Agreement, or the IC Agreement,
for any reason whatsoever, in the tri-state New York City
metropolitan area and Florida or in any other state in which
the Independent Contractor is doing business, or in the future
does business, under the IC Agreement as such agreement may be
amended or supplemented or replaced from time to time. Except
as provided in Sections 12 (e), (f) and (g) below, to the extent
that the operation of the Independent Contractor whether or not
the IC Agreement has been terminated, should at any time be
deemed to be in competition or conflict with the operations of
the Company, the Company hereby waives any such conflicts and any
such competitive activity shall not be deemed a violation of this
Agreement.
(b) Except as provided in Sections 12 (e), (f) and (g) of this
Agreement, during the Term and for a period of three (3) years
after termination of employment, Employee will not, directly or
indirectly, solicit or induce any other employee of the
Company or any parent or affiliate to leave his or her
employment, or solicit or induce any consultant or independent
contractor to sever that person's relationship with the
Company or to become an employee or consultant to any
independent contractor or brokerage that the Employee is employed
by or has an ownership interest in. Provided, however,
that in the event any provision of this subparagraph shall be in
conflict with the provisions of the IC Agreement, the
provisions of the IC Agreement shall prevail. Furthermore,
except as provided in Sections 12 (e), (f) and (g) below,
upon termination of this Agreement and termination of the IC
Agreement, nothing herein contained shall prohibit the
Employee from soliciting any other employee or independent
contractor who was employed or located at any branch office
under the supervision of the Employee as an Independent
Contractor, or JSM, pursuant to the IC Agreement.
(c) If any court shall determine that the duration or geographical
limit of any covenant contained in this Section 12 is
unenforceable, it is the intention of the parties that covenant
shall not thereby be terminated but shall be deemed amended to the
extent required to render it valid and enforceable, such amendment
to apply only in the jurisdiction of the court that has made such
adjudication.
(d) Employee acknowledges and agrees that the covenants contained in
Sections 11 and 12 hereof are of the essence in this Agreement,
that each of such covenants is reasonable and necessary to protect
and preserve the interests, properties, and business of the
Company, and that irreparable loss and damage will be suffered by
the Company should Employee breach any of such covenants. Employee
further represents and acknowledges that he shall not be precluded
from gainful engagement in a satisfactory fashion by the
enforcement of these provisions.
(e) In the event there is a Change in Control and the Company
exercises the purchase option ("Purchase Option") described
Section 6 (c) to the Branch Agreement and Amendment to IC
Agreement dated on even date herewith by and among the Company,
Employee and JSM ("Branch Agreement"), the Employee and the
Company agree as follows:
(i) The Employee shall waive the right to receive any Severance and Benefits
payments described herein;
(ii) Section 12 (a) of this Agreement shall not be applicable to the
Employee;
(iii)Section 12 (b) of this Agreement shall be applicable to the Employee
with respect to JSM, Independent Contractor and the Company except with
respect to ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇.
(f) In the event there is a Change in Control where the Company does
not exercise the Purchase Option under the Branch Agreement and
the Employee elects to receive Severance and Benefits payments
described herein, then the Company and the Employee agree as
follows:
(i) The term of the IC Agreement shall not terminate due to a Change in
Control as provided in Section 10 (c) of the Branch Agreement;
(ii) Section 12 (a) of this Agreement shall be applicable
for a term ending one (1) year from the later of the
date this Agreement terminates or the date the IC
Agreement terminates. Employee shall be permitted to
own and operate JSM as the Independent Contractor.
(iii) Section 12 (b) of this Agreement shall be applicable except with
respect JSM employees or employees of the Independent Contractor.
(g) In the event there is a Change in Control where the Company does
not exercise the Purchase Option under the Branch Agreement and
the Employee waives his right to receive Severance and Benefits
payments described herein, then the Company and the Employee agree
as follows:
(i) The term of the IC Agreement shall not terminated due to a Change in
Control and as provided in Section 10 (c) of the Branch Agreement;
(ii) Section 12 (a) of this Agreement shall not be
applicable and there shall be no prohibition
whatsoever on Employee owning or operating JSM, as an
independent contractor, as a broker dealer or
otherwise.
(iii) Section 12 (b) of this Agreement shall be applicable except with
respect JSM employees or employees of the Independent Contractor.
(h) Anything herein to the contrary notwithstanding, in the event the
employment of the Employee should be terminated under any
circumstance that would constitute a Triggering Event under
Subsections 5(a)(1) or 5(a)(3) of this Agreement and the Employee
waives his right to receive Severance and Benefit payments
described herein, the provisions of this Section 12 (a) shall not
apply and Section 12 (b) shall only restrict Employee from
soliciting employees of the Company.
Any reference in this Section 12 of the Agreement to an "employee of
the Independent Contractor" shall be deemed to include anyone who
is under the supervision and control of the Independent Contractor
pursuant to the IC Agreement.
13. AVAILABILITY OF INJUNCTIVE RELIEF. Employee acknowledges and agrees that any
breach by him of the provisions of Sections 11 or 12 hereof will cause the
Company irreparable injury and damage for which it cannot be adequately
compensated in damages. Employee therefore expressly agrees that the Company,
subject to the provisions of Section 20 hereof providing for arbitration, shall
be entitled to seek injunctive and/or other equitable relief, on a temporary or
permanent basis to prevent any anticipatory or continuing breach of this
Agreement or any part hereof, and is secured as enforcement. Nothing herein
shall be construed as a waiver by the Company of any right it may have or
hereafter acquired to monetary damages by reason of any injury to its property,
business or reputation or otherwise arising out of any wrongful act or omission
of it.
14. SURVIVAL. The covenants, agreements, representations and warranties
contained in or made pursuant to this Agreement shall survive Employee's
termination of employment, irrespective of any investigation made by or on
behalf of any party.
15. MODIFICATION. This Agreement sets forth the entire understanding of the
parties With respect to the subject matter hereof, supersedes all existing
agreements between them concerning such subject matter, and may be modified only
by written instrument duly executed by each party.
16. NOTICES. Any notice required or permitted hereunder shall be deemed validly
given if delivered by hand, verified overnight delivery, or by first class,
certified mail to the following addresses (or to such other address as the
addressee shall notify in writing to the other party):
If to the Company: vFinance Investments, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: CEO
If to Employee: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
JSM Capital Holding Corp.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇.
▇▇▇ ▇▇▇▇, ▇. Y. 10022
17. WAIVER. Any waiver by either party of a breach of any provision of this
Agreement shall not operate as or be construed to be a waiver of any other
breach of such provision or of any breach of any other provision of this
Agreement. The failure of a party to insist upon strict adherence to any term of
this Agreement on one or more occasions shall not be considered a waiver or
deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement. All waivers must be in writing.
18. BINDING EFFECT. The Company's rights and obligations under this Agreement
shall not be transferable by assignment or otherwise, and any attempt to do any
of the foregoing shall be void. The provisions of this Agreement shall be
binding upon the Employee and his heirs and personal representatives, and shall
be binding upon and inure to the benefit of the Company, its successors and
assigns.
19. HEADINGS. The headings in this Agreement are solely for convenience of
reference and shall be given no effect in the construction or interpretation of
this Agreement.
20. GOVERNING LAW - ARBITRATION. This Agreement is to be performed in the State
of Florida, and the validity, construction and enforcement of, and the remedies
under, this Agreement shall be governed in accordance with the laws of the State
of Florida, without giving effect to any choice of laws principles. 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 New York City 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.
21. ENTIRE AGREEMENT. This writing constitutes the binding and entire
agreement of the parties superseding and extinguishing all prior agreements or
understandings regarding the subject matter hereof, and may not be modified or
amended without a written document executed by the parties hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first hereinabove written.
EMPLOYER:
vFinance, Inc.
By:
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, CEO & President
EMPLOYEE:
By:
----------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Schedule A
Incentive Compensation
In the capacity of President, Retail Brokerage Division (i.e., "Division"),
Employee will be entitled receive annual incentive compensation ("Bonus")
equal to 30% of the "Net Income" and "Net Securities" of the Division once
Net Income exceeds $125,000. If Employee's salary of $125,000 (or a portion
of it) is already deducted at arriving at Net Income, such amount shall be
added back for purposes of this calculation.
"Net Income" is defined as revenues less all direct and variable expenses
of the Division per the Company's standard financial reporting policy and
procedures which includes but is not limited to budgeted (fixed annually)
divisional and corporate overhead. For purposes of this calculation:
1. The Company and Employee must agree on the allocated budgeted
divisional and fixed overhead which gets fixed on an annual
basis;
2. In no event shall corporate overhead exceed 10% of revenues of the
Division; and
3. Bonuses of the executive officers of the Company shall be excluded from
corporate overhead.
"Net Securities" shall be defined as "Gross Securities (Stock, Warrants, or
Options) received by the Company in a transaction less options due to
finders, employees of the Division or allocable to the other divisions of
the Company pursuant to the Incentive Compensation Grid.
Incentive compensation based on Net Income will be estimated and paid
quarterly based upon year to date financial results projected for the
Company's fiscal year. The maximum amount that the employee will be paid in
any quarter will be 70% of the annual projected incentive compensation. The
final Bonus payment will be payable within thirty days of the filing the
Company's Form 10-K with the Securities and Exchange Commission.
Schedule B
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT is entered into as of January 1, 2003 by and between
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ("Optionee") and vFinance, Inc., a Delaware corporation (the
"Corporation").
W I T N E S S E T H:
WHEREAS, Optionee and the Corporation have concurrently herewith entered into a
certain Employment Agreement (the "Employment Agreement"); and
WHEREAS, the Corporation desires to grant to Optionee the option to acquire
shares of common stock, $.01 par value, of the Corporation (the "Common Stock")
upon the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises, the mutual covenants
set forth herein and other good and valuable consideration, the receipt of which
is hereby acknowledged, Optionee and the Corporation hereby agree as follows:
1. (a) GRANT OF THE OPTIONS. Subject to the terms and conditions of this
Agreement, the Corporation hereby grants to Optionee the right to purchase
(individually referred to as the "Option" or collectively referred to as the
"Options") from the Corporation Five Hundred Thousand (500,000) shares of the
Common Stock (the "Option Shares"), subject to the following vesting schedule,
at the purchase price equal to $0.20 per share for a five (5) year period
commencing on the date hereof:
(i) 125,000 Option Shares shall vest immediately upon the date hereof;
(ii) 125,000 Option Shares shall vest one (1) year from the date hereof;
(iii) 125,000 Option Shares shall vest two (2) years from the date hereof;
(iv) 125,000 Option Shares shall vest three (3) years from the date hereof
2. RIGHTS OF OPTIONEE. Optionee by virtue of holding the Options to purchase the
Option Shares shall not have any rights to any dividends to be distributed by
the Corporation to the shareholders or any other rights of a shareholder in the
Corporation with respect to any of the Option Shares until Optionee exercises
the Option to purchase the Option Shares pursuant to Section 5 of this
Agreement.
3. TRANSFERABILITY OF THE OPTIONS. The Options may not be assigned, transferred,
or otherwise disposed of, or pledged or hypothecated or in any way be subject to
execution, attachment or other process. Any assignment, transfer, pledge,
hypothecation or other disposition of the Options attempted contrary to the
provisions of this Agreement or any levy, execution, attachment or other process
attempted upon the Options will be null and void and without effect.
4. EXERCISE OF THE OPTIONS. The Option to purchase the Option Shares shall be
exercisable upon the terms and conditions hereinafter set forth:
Subject to the terms and conditions of this Agreement, the Option to purchase
the Option Shares shall be exercisable by Optionee upon delivery of notice to
the Corporation (the "Exercise Notice") in accordance with the procedure
prescribed in this Section 4. The Exercise Notice shall state that Optionee has
elected to exercise the Option or any portion thereof. The Option may be
exercised by the Optionee, in whole or in part, by the delivery of the Exercise
Notice to the office of the Corporation, and by payment to the Corporation of
the Purchase Price in cash or by wire transfer, for each share being purchased.
Upon the exercise of the Option, a certificate or certificates for the shares of
Common Stock so purchased, registered in the name of the holder, shall be
promptly delivered to the holder hereof within a reasonable time. The person in
whose name any certificate for shares of Common Stock is issued upon exercise of
the Option shall for all purposes be deemed to have become the holder of record
of such shares on the date on which the Exercise Notice was delivered and
payment of the Purchase Price was made, except that, if the date of such
surrender and payment is a date on which the stock transfer books of the
Corporation are closed, such person shall be deemed to have become the holder of
such shares at the close of business on the next succeeding date on which the
stock transfer books are open.
5. ACCELERATED VESTING AND EXERCISE PERIOD.
(a) DEATH OR DISABILITY. In the event of Optionee's death or Disability while
employed with the Corporation prior to Optionee's vesting or exercise of all of
the Options, then all of the Options shall become immediately vested and
exercisable. For purposes hereof, "Disability" shall mean Optionee's failure to
perform his employment duties with the Company for a continuous three month
period, or an aggregate of four months during any six month period, as a result
of ANY illness or accident, as verified by at least two U.S. licensed medical
doctors reasonably acceptable to the Company.
(b) CESSATION OF EMPLOYMENT. Notwithstanding anything to the contrary contained
herein, in the event that Optionee ceases to be employed by the Corporation for
any reason other than Optionee's death, Disability, the occurrence of a
Triggering Event or termination by the Company without cause (as defined within
the Employment Agreement) (the date of Optionee's cessation of employment shall
be referred to as the "Cessation Date"), then all non-vested Options shall
expire and be forfeited on the Cessation Date. In the event that the Company
terminates Optionee's employment without cause, or upon a Triggering Event, then
all non-vested Options shall immediately vest as of the Cessation Date.
(c) CHANGE OF CONTROL. In the event of a "Change of Control" as defined in the
Employment Agreement, then all non-vested Options shall immediately vest.
6. RESERVATION OF SHARES. The Corporation covenants and agrees that at all times
that this Stock Option Agreement shall be in effect it shall have authorized,
and reserved, Common Stock of the Corporation sufficient for the exercise of the
Options and the purchase of Common Stock by Optionee.
7. SUBSTITUTION OF THIS AGREEMENT UPON ADOPTION OF QUALIFIED STOCK OPTION PLAN.
It is possible that the Corporation will, within twelve (12) months from the
date of this Agreement, adopt a Qualified Stock Option Plan for members of its
senior executive management, including Optionee. In the event of such adoption,
the Corporation agrees upon written request from Optionee to amend this
Agreement so as to cancel all unvested option rights set forth herein, PROVIDED,
HOWEVER that the same economic terms (including numbers of share options,
vesting periods and price) remain the same with respect to Optionee, and are
granted to Optionee, pursuant to the terms of the adopted Qualified Stock Option
Plan. All rights existing as to vested Stock Options as set forth herein shall
remain in effect notwithstanding the adoption of a Qualified Stock Option Plan.
8. INVESTMENT. Optionee acknowledges that the Option Shares are not being
offered pursuant to a registration statement under the Securities Act of 1933,
as amended (the "Act"), or any other securities laws. Optionee acknowledges that
the Option Shares are being acquired for Optionee's own account for investment
purposes only and not with a view to, or for sale in connection with, any public
distribution thereof and will not sell, or offer to sell or otherwise dispose,
of any interest in the Option Shares acquired by Optionee in violation of the
Act. Optionee has had substantial experience in business and financial matters
and in making investments of the type contemplated by this Agreement, is capable
of evaluating the merits and risks of the purchase of the Option Shares and is
able to bear the economic risks of such investment.
9. REGISTRATION RIGHTS AND LIQUIDITY. Although there can be no assurance that
the Option Shares will be registered under the Act, that an exemption from such
registration will be available, or that there will be a market for the Option
Shares in the future, the Corporation agrees to use its best efforts to enable
and facilitate Optionee's sale or disposition of the Option Shares in compliance
with the Act at the earliest date reasonably practicable. Furthermore, Optionee
is hereby granted piggy back registration rights as described in "Exhibit A"
attached hereto and incorporated herein.
10. ADJUSTMENTS. In the event of a stock dividend, stock split, share
combination, recapitalization, merger, consolidation or reorganization of or by
the Corporation, the number or class of shares purchasable (and purchase price
per share) upon exercise of the Option immediately prior thereto shall be
adjusted so that Optionee shall be entitled to receive the kind and number of
shares or other securities which Optionee would have owned or have been entitled
to receive after the happening of any of the events described above, had the
Option been exercised immediately prior to the happening of any of such events
or any record date with respect thereto. Any adjustment made pursuant to this
Section shall become effective immediately after the effective date of such
events retroactive to the record date, if any, for such events.
11. NOTICES. Any notice required or permitted hereunder shall be deemed validly
given if delivered by hand, verified overnight delivery, or by first class,
certified mail to the following address of Optionee (or to such other address as
Optionee may notify in writing to Corporation):
If to Optionee: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
If to the Company: vFinance, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
12. BENEFITS OF AGREEMENT. This Agreement shall inure to the benefit and shall
be binding upon the successors, heirs, legal representatives and permitted
assigns of the parties hereto.
13. SEVERABILITY. In the event that any one or more provisions of this Agreement
shall be deemed to be illegal or unenforceable such illegality or
unenforceability shall not affect the validity and enforceability of the
remaining legal and enforceable provisions hereof, which shall be construed as
if such illegal or unenforceable provision or provisions had not been inserted.
14. GOVERNING LAW; VENUE. This Agreement will be covered and construed under the
laws of the State of Florida, without giving effect to rules governing conflicts
of law, with proper venue with respect to all disputes related to this Agreement
being Broward County, Florida.
15. COUNTERPARTS. This Agreement may be executed in two (2) or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
THE CORPORATION:
VFINANCE, INC., a Delaware corporation
By:
-----------------------------------
Title:
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OPTIONEE:
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
EXHIBIT "A"
REGISTRATION RIGHTS
Capitalized terms used but not defined herein shall have the respective meanings
ascribed to such terms in the Option to which this Exhibit A is attached.
(a) PIGGY-BACK REGISTRATION RIGHTS. If at any time commencing after January 1,
2004 until the expiration of the Option (the "Registration Period"),
▇▇▇▇▇▇▇▇.▇▇▇, Inc. (the "Company") proposes to register any of securities under
the Securities Act (other than registration of a stock option, stock purchase or
compensation or incentive plan or of stock issued or issuable pursuant to any
such plan, or dividend investment plan, a registration of stock proposed to be
issued in exchange for securities or assets of, or in connection with the merger
or consolidation with, another person or entity , or a registration of stock
proposed to be issued in exchange for securities of such other person or
entity), the Company shall give prompt written notice thereof to the Holder and,
upon the written request made within ten (10) days after the Holder and, upon
receipt of such notice, the Company shall use its best efforts to effect as part
of such registration the registration under the Securities Act of that number of
the Option shares ("Option Shares") which the Holder requests the Company to
register, provided that if the registration relates to a firm commitment,
underwritten public offering, the managing underwriter of the Company's public
offering, if any, shall be of the opinion that the inclusion in such
registration of such number of Option Shares will not interfere with the
successful marketing of all of the Company's securities being registered. If the
managing underwriter, if any, reasonably requests the Holder to reduce in whole
or in part the number of Option Shares sought or be registered by the Holder,
the Holder shall comply with the request of the managing underwriter. In any
underwritten offering, the Holder shall sell the Option Shares registered as
part of such underwritten offering to the underwriters of such offering on the
same terms and conditions as apply to the Company. In connection with any
registration pursuant to this Section (a), the Holder shall provide the Company
with such information regarding the Holder and the distribution of the Option
Shares as the Company and the managing underwriter shall reasonably request for
use in the registration statement relating to such offering. The Company shall
pay all costs and expenses of the Holder. The Company shall not be obliged to
effect registration under the Securities Act pursuant to this Section (a) on
more than one occasion; PROVIDED, HOWEVER, that this limitation shall not apply
if the number of shares requested to be registered by the Holder shall have been
reduced pursuant to the second sentence of this Section (a) unless and until the
occurrence of an occasion on which the shares requested by the Holder to be
registered have not been so reduced.
(b) GENERAL CONDITIONS. In connection with each registration effected pursuant
to Section (a), the Company and the Holder agree as follows:
(i) INDEMNIFICATION OF HOLDER. The Company shall indemnify and hold harmless the
Holder against any and all losses, claims, damages, or liabilities to which the
Holder may become subject under the Securities Act, or any other statute or
common law, including any amount paid in settlement of any litigation, commenced
or threatened, if such settlement is effected with the written consent of the
Company, and to reimburse them for any legal or other expenses incurred by them
in connection with investigating any claims and defending any action insofar as
any such losses, claim, damages, liabilities or actions arise out of or are
based upon 1) any untrue statement or alleged untrue statement of a material
fact, contained in the registration statement relating to the sale of the Option
Shares, or any post-effective amendment thereof, or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, 2) any untrue statement
or alleged untrue statement of a material fact, contained in a preliminary
prospectus, if used prior to the effective date of such registration statement,
or contained in the prospectus (as amended or supplemented, if the Company shall
have filed with the SEC any amendment thereof or supplement thereto), if used
within the period during which the Company is required to keep the registration
statement to which the prospectus relates current pursuant to the terms hereof,
or the omission or alleged omission to state therein (if so used) the material
fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The indemnification
agreement contained in this agreement, however, shall not: 1) apply to such
losses, claims, damages, liabilities, or actions arising out of, or based upon,
any such untrue statement or alleged omission, if such statement or omission was
in reliance upon and in conformity with the information furnished in writing to
the Company by the Holder for use in the registration statement or any
preliminary prospectus or prospectus contained in the registration statement or
any amendment thereof or supplement thereto, or 2) inure to the benefit of any
underwriter from whom the person asserting any such losses, claims, damages,
expenses or liabilities purchased the securities which are the subject thereof
(or to the benefit of any person controlling such underwriter), if such
underwriter failed to send or give a copy of the prospectus to such person at or
prior to the written confirmation of the sale of such securities to such person.
(ii) INDEMNIFICATION OF THE COMPANY. The Holder and each underwriter of the
Option Shares to be registered (such party and such underwriters being referred
to severally in this subparagraph as the "Indemnifying Party") shall agree, in
the same manner and to the same extent as set forth in the preceding paragraph,
to indemnify and hold harmless the Company and each person, if any, who controls
the Company within the meaning of Section 15 of the Securities Act, its
directors and those officers of the Company who shall have signed such
registration statement, with respect to any statement in or omission from such
registration statement or any post-effective amendment thereof or any
preliminary prospectus (as amended or supplemented, if amended or supplemented
as aforesaid) contained in such registration statement, if such statement or
omission was made in reliance upon and in conformity with information furnished
in writing to the Company by such Indemnifying Party for use in such
registration statement or any preliminary prospectus or prospectus contained in
such registration statement or any amendment thereof or supplement thereto.
(iii) NOTICE OF INDEMNIFIABLE ACTION. Each indemnified party will, promptly
after the receipt of notice of the commencement of any action against such
indemnified party in respect of which indemnity may be sought from a party
hereto on account of an indemnity agreement contained in this Section, notify
the indemnifying party in writing of the commencement thereof. The omission of
any indemnified party so to notify an indemnifying party of any such action
shall relieve the indemnifying party from any liability in respect of such
action which it may have to such indemnified party on account of the indemnity
agreement contained in this Section, but shall not relieve the indemnifying
party from any other liability which it may have to such indemnified party.
(iv) TERMINATION OF OBLIGATION. The Company shall not be required to file a
registration statement or to keep a registration statement effective if the
Option Shares could be publicly sold without registration under the Securities
Act.