Document:

ex10-6.htm

Exhibit 10.6

 

SECURITIES PURCHASE AGREEMENT

 

THIS SECURITIES PURCHASE AGREEMENT (“Agreement”) is made as of the 31st day of July, 2012 by and between Jammin Java Corp., a Nevada corporation (the “Company”) and Fairhills Capital Offshore Ltd., a Cayman Islands exempted company (the “Purchaser”).

 

RECITALS

 

WHEREAS, the Purchaser wishes to purchase from the Company, and the Company wishes to sell to the Purchaser, upon the terms and subject to the conditions stated in this Agreement, the Shares (as defined below); and

 

WHEREAS, to induce the Purchaser to consummate the transactions contemplated by the Agreement, the Company has agreed to provide certain registration rights under the Securities Act (as defined below in the Agreement) and applicable state securities laws.

 

NOW, THEREFORE, in consideration of the mutual promises contained herein and other good and valuable consideration, receipt of which is hereby acknowledged, the parties to this Agreement agree as follows:

 

Section 1.    Definitions.  For the purposes of this Agreement, the following terms shall have the meanings set forth below:

 

 “Affiliate” means, with respect to any Person, any other Person which directly or indirectly through one or more intermediaries Controls, is controlled by, or is under common Control with, such Person.

 

“Agreement” has the meaning set forth in the preamble.

 

“Business Day” means a day, other than a Saturday or Sunday, on which banks in New York City are open for the general transaction of business.

 

“Closing” has the meaning set forth in Section 3 hereof.

 

“Closing Date” has the meaning set forth in Section 3 hereof.

 

“Commission” means the Securities and Exchange Commission.

 

“Common Stock” means the common stock of the Company, par value $0.001 per share, and any other class of securities into which such securities may hereafter be reclassified or changed.

 

“Company” has the meaning set forth in the preamble.

 

“Control” (including the terms “controlling”, “controlled by” or “under common control with”) means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

 

  

  

  

 

 

“Effectiveness Deadline” means (i) with respect to the Registration Statement, the earlier of the (A) 120th calendar day after the Filing Deadline and (B) the fifth (5th) Business Day after the date the Company is notified (orally or in writing, whichever is earlier) by the SEC that such Registration Statement will not be reviewed or will not be subject to further review; provided, that if the Effectiveness Deadline falls on a Saturday, Sunday or other day that the SEC is closed for business, the Effectiveness Deadline shall be extended to the next Business Day on which the SEC is open for business.

 

 “Exchange Act” means the Securities Exchange Act of 1934, as amended, or any successor statute, and the rules and regulations promulgated thereunder.

 

“Filing Deadline” means (i) with respect to the Registration Statement, the 30th calendar day after the Initial Closing Date, provided, however, that if the Filing Deadline falls on a Saturday, Sunday or other day that the SEC is closed for business, the Filing Deadline shall be extended to the next business day on which the SEC is open for business.

 

“Material Adverse Effect” means a material adverse effect on (i) the assets, liabilities, results of operations, condition (financial or otherwise), business, or prospects of the Company and its subsidiaries taken as a whole, (ii) the legality or enforceability of any of the Transaction Documents or (iii) the ability of the Company to perform its obligations under the Transaction Documents.

 

 “Person” means an individual, corporation, partnership, limited liability company, trust, business trust, association, joint stock company, joint venture, sole proprietorship, unincorporated organization, governmental authority or any other form of entity not specifically listed herein.

 

“Purchaser” and “Purchasers” have the meanings set forth in the preamble.

 

“Registrable Securities” means all of (i) the Shares, provided, that the Purchaser has completed and delivered to the Company a Notice of Registration Statement and Selling Securityholder Questionnaire attached hereto as Exhibit B and provided to the Company any other information regarding the Purchaser and the distribution of the Registrable Securities as the Company may, from time to time, reasonably require for inclusion in a Registration Statement pursuant to applicable law; and provided, further, that with respect to a particular Purchaser, such Purchaser’s Shares shall cease to be Registrable Securities upon the earliest to occur of the following: (A) a sale pursuant to a registration statement or Rule 144 under the Securities Act (in which case, only such security sold by the Purchaser shall cease to be a Registrable Security); or (B) becoming eligible for resale by the Purchaser under Rule 144 without the requirement for the Company to be in compliance with the current public information required thereunder and without volume or manner-of-sale restrictions, pursuant to a written opinion letter to such effect, addressed, delivered and acceptable to the Company’s transfer agent.

 

 “Registration Statement” means a registration statement or registration statements of the Company filed under the Securities Act covering Registrable Securities, amendments and supplements to such Registration Statements, including post-effective amendments, all exhibits and all material incorporated by reference or deemed to be incorporated by reference in such Registration Statements.

 

  

  

  

“Regulation D” has the meaning set forth in Section 5(e) hereof.

 

“Regulation S” has the meaning set forth in Section 5(e) hereof.

 

“Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.

 

“SEC Reports” means all reports, schedules, forms, statements and other documents required to be filed by the Company under the Securities Act and the Exchange Act for the 12 months preceding the date hereof (or such shorter period as the Company was required by law or regulation to file such material).

 

“Securities” means the Shares and the Additional Shares (if any).

 

“Securities Act” means the Securities Act of 1933, as amended, or any successor statute, and the rules and regulations promulgated thereunder.

 

“Transaction Documents” means this Agreement, and all exhibits and schedules thereto and hereto and any other documents or agreements executed in connection with the transactions contemplated by this Agreement or in accordance with the terms and conditions of any Transaction Document.

 

“U.S. Person” has the meaning set forth in Section 5(e) hereof.

 

Section 2.   Purchase and Sale of the Shares. Subject to the terms and conditions of this Agreement, on the applicable Closing Date (as defined below), the Company shall issue and sell to Purchaser, and Purchaser shall purchase from the Company, 625,000 shares of Common Stock, $0.001 par value per share, of the Company at a per share purchase price of $0.12 (the “Shares”).

 

Section 3.  Closing.  Upon the terms and subject to the conditions of this Agreement, the transactions contemplated by this Agreement shall take place at closings (each a “Closing”) to be held at the offices of Anslow & Jaclin LLP located at 195 Route 9 South, Manalapan, NJ 07726, at a time and date to be specified by the Parties, which shall be no later than the second (2nd) Business Day following the satisfaction or, if permitted pursuant hereto, waiver of the conditions set forth in Section 7, or at such other location, date and time as Purchasers and the Company shall mutually agree.  The date and time of the Closings are referred to herein as the “Closing Date.”  The first Closing shall occur substantially concurrent with the execution and delivery of this Agreement by the parties hereto, at which time 312,500 of the Shares shall be purchased by the Purchaser (the “Initial Closing Date”).  The second Closing at which time the remaining 312,500 of the Shares shall be purchased by the Purchaser, shall occur the date that the Company files an Amendment to the Registration Statement with the SEC responding to the initial round of comments on the Registration Statement.

 

  

  

  

Section 4.   Representations and Warranties of the Company. The Company hereby represents and warrants to the Purchasers as follows:

 

(a)           Organization, Good Standing and Qualification.  The Company has been duly organized and validly exists as a corporation in good standing under the laws of the State of Nevada.  The Company is duly qualified to do business and is in good standing as a foreign corporation in each jurisdiction in which its ownership or lease of property or the conduct of its business require such qualification and has all corporate power and authority necessary to own or hold its properties and to conduct the business in which it is engaged, except where the failure to so qualify or have such power or authority would not have, singly or in the aggregate, or could not reasonably be expected to have a Material Adverse Effect.

 

(b)           Authorization.  The Company has full corporate power and authority to enter into the Transaction Documents and has taken all requisite action on the part of the Company, its officers, directors and stockholders necessary for (i) the authorization, execution and delivery of the Transaction Documents, (ii) the authorization of the performance of all obligations of the Company hereunder or thereunder, and (iii) the authorization, issuance (or reservation for issuance) and delivery of the Securities.  The Transaction Documents constitute the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability, relating to or affecting creditors’ rights generally and to general equitable principles.

 

(c)           Capitalization.  All of the issued and outstanding shares of the Company’s capital stock have been duly authorized and validly issued.  No Person is entitled to pre-emptive or similar statutory or contractual rights with respect to any securities of the Company.  Other than as described on Schedule 4(c), there are no outstanding warrants, options, convertible securities or other rights, agreements or arrangements of any character under which the Company is or may be obligated to issue any equity securities of any kind and except as contemplated by this Agreement.  Other than as described on the Schedule 4(c), there are no voting agreements, buy-sell agreements, option or right of first purchase agreements or other agreements of any kind among the Company and any of the security holders of the Company relating to the securities of the Company held by them.

 

(d)           Valid Issuance.  The Securities have been duly and validly authorized and, when issued pursuant to the Transaction Documents, the Securities will be validly issued, fully paid and nonassessable, and shall be free and clear of all encumbrances and restrictions (other than those created by the Purchasers), except for restrictions on transfer set forth in the Transaction Documents or imposed by applicable securities laws.

 

(e)           Consents.  The execution, delivery and performance by the Company of the Transaction Documents and the offer and issuance of the Securities require no consent of, action by or in respect of, or filing with, any governmental body, agency, or official other than filings that have been made pursuant to applicable state securities laws and post-sale filings pursuant to applicable state and federal securities laws which the Company undertakes to file within the applicable time periods.

 

  

  

  

(f)            No Conflict, Breach, Violation or Default.  The execution, delivery and performance of the Transaction Documents by the Company and the issuance and sale of the Securities will not result in the creation or imposition of any lien, charge or encumbrance upon any of the assets of the Company pursuant to the terms or provisions of, or result in a breach or violation of any of the terms or provisions of, or conflict with or constitute a default under, or give any party a right to terminate any of its obligations under, or result in the acceleration of any obligation under, (i) the certificate or articles of incorporation or by-laws of the Company, (ii) any indenture, mortgage, deed of trust, voting trust agreement, loan agreement, bond, debenture, note agreement or other evidence of indebtedness, lease, contract or other agreement or instrument to which the Company is a party or by which the Company or any of its properties is bound or affected, or (iii) violate or conflict with any judgment, ruling, decree, order, statute, rule or regulation of any court or other governmental agency or body applicable to the business or properties of the Company, except as to (ii) and (iii) above for such breaches, violations or defaults which, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect.

 

Section 5.  Representations and Warranties of the Purchasers. Each of the Purchasers hereby severally, and not jointly, represents and warrants to the Company that:

 

(a)           Organization and Existence.  If such Purchaser is an entity, such Purchaser is a validly existing corporation, limited partnership or limited liability company and has all requisite corporate, partnership or limited liability company power and authority to invest in the Securities pursuant to this Agreement.

 

(b)           Authorization.  If such Purchaser is an entity, the execution, delivery and performance by such Purchaser of the Transaction Documents to which such Purchaser is a party have been duly authorized and each will constitute the valid and legally binding obligation of such Purchaser, enforceable against such Purchaser in accordance with their respective terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability, relating to or affecting creditors’ rights generally.  If such Purchaser is a person, such Purchaser has reached the age of 21 and has full power and authority to execute and deliver the Transaction Documents to which such Purchaser is a party and each will constitute the valid and legally binding obligation of such Purchaser, enforceable against such Purchaser in accordance with their respective terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability, relating to or affecting creditors’ rights generally.

 

(c)           Purchase Entirely for Own Account.  The Securities to be received by such Purchaser hereunder will be acquired for such Purchaser’s own account, not as nominee or agent, and such Purchaser is not a broker-dealer registered with the Commission under the Exchange Act or an entity engaged in a business that would require it to be so registered.  Nothing contained herein shall be deemed a representation or warranty by such Purchaser to hold the Securities for any period of time.

 

(d)           Brokers and Finders.  No Person will have, as a result of the transactions contemplated by the Transaction Documents, any valid right, interest or claim against or upon the Company or any Purchaser for any commission, fee or other compensation pursuant to any agreement, arrangement or understanding entered into by or on behalf of such Purchaser.

 

  

  

  

(e)           Status of Purchaser.  Such Purchaser is (i) an “accredited investor” as defined in Rule 501 of Regulation D promulgated by the Commission pursuant to the Securities Act (“Regulation D”) and meets the requirements of at least one of the suitability standards for an accredited investor as set forth in Rule 501 of Regulation D or (ii) is not a “U.S person” (a “U.S. Person”) as described in Rule 902 of Regulation S promulgated by the Commission pursuant to the Securities Act (“Regulation S”).  Such Purchaser, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial, tax and other matters so as to be capable of evaluating the merits and risks of, and to make an informed investment decision with respect to, the prospective investment in the Securities, which represents a speculative investment, and has so evaluated the merits and risks of such investment.  Such Purchaser is able to bear the economic risk of an investment in the Securities for an indefinite period and is able to afford a complete loss of such investment.

 

(f)           Acknowledgement of Risk. Such Purchaser agrees, acknowledges and understands that its investment in the Securities involves a significant degree of risk, including, without limitation that: (a) the Company is a development stage business with limited operating history and may require substantial funds; (b) an investment in the Company is highly speculative and only Persons who can afford the loss of their entire investment should consider investing in the Company and the Securities; (c) such Purchaser may not be able to liquidate its investment; (d) transferability of the Securities is extremely limited; and (e) in the event of a disposition of the Securities, such Purchaser can sustain the loss of its entire investment. Such Purchaser has considered carefully and understands the risks associated with an investment in the Securities.

 

(g)           Restricted Securities.  Such Purchaser understands and agrees that the Securities have not been registered under the Securities Act or any applicable state securities laws, by reason of their issuance in a transaction that does not require registration under the Securities Act (based in part on the accuracy of the representations and warranties of such Purchaser contained herein), and that such Securities must be held indefinitely unless a subsequent disposition is registered under the Securities Act or any applicable state securities laws or is exempt from such registration.  Such Purchaser acknowledges that such Purchaser is familiar with Rule 144 and that such person has been advised that Rule 144 permits resales only under certain circumstances.  Such Purchaser understands that to the extent that Rule 144 is not available, such Purchaser will be unable to sell any Securities without either registration under the Securities Act or the existence of another exemption from such registration requirement.

 

(h)           Reliance on Representations.  Such Purchaser agrees, acknowledges and understands that the Company and its counsel are entitled to rely on the representations, warranties and covenants made by such Purchaser herein.  Such Purchaser further represents and warrants that (i) this Agreement does not contain any untrue statement or a material fact or omit any material fact concerning such Purchaser and (ii) that the Investor Questionnaire accompanying this Agreement in the form attached hereto as Exhibit A does not contain any untrue statement or a material fact or omit any material fact concerning such Purchaser; provided, however, that clause (ii) shall not apply to any Purchaser that is not a U.S. Person.

 

  

  

  

(i)           Additional Representations and Warranties of non-U.S. Persons. If a Purchaser indicates that such Purchaser is a not a U.S. Person on the signature page to this Agreement, then such Purchaser further makes the following representations and warranties to the Company:

 

(i)           Such Purchaser understands that no action has been or will be taken in any jurisdiction by the Company that would permit a public offering of the Securities in any country or jurisdiction where action for that purpose is required.

 

(ii)           Such Purchaser (i) as of the execution date of this Agreement is not located within the United States, and (ii) is not purchasing the Securities for the account or benefit of any U.S. Person except in accordance with one or more available exemptions from the registration requirements of the Securities Act or in a transaction not subject thereto.

 

(iii)           Such Purchaser will not resell the Securities except in accordance with the provisions of Regulation S, pursuant to a registration under the Securities Act, or pursuant to an available exemption from registration.

 

(iv)           Such Purchaser will not engage in hedging transactions with regard to the Company’s securities prior to the expiration of the distribution compliance period specified in Category 2 or 3 (paragraph (b)(2) or (b)(3)) in Rule 903 of Regulation S, as applicable, unless in compliance with the Securities Act; and as applicable, shall include statements to the effect that the Securities have not been registered under the Securities Act and may not be offered or sold in the United States or to U.S. Persons (other than distributors) unless the Securities are registered under the Securities Act, or an exemption from the registration requirements of the Securities Act is available.

 

(v)            No form of “directed selling efforts” (as defined in Rule 902 of Regulation S), general solicitation or general advertising in violation of the Securities Act has been or will be used nor will any offers by means of any directed selling efforts in the United States be made by such Purchaser or any of its representatives in connection with the offer and sale of the Securities.

 

Section 6.              (a)            Registration Rights.  The Company shall use commercially reasonable efforts to prepare and, as soon as practicable, but in no event later than the Filing Deadline, file with the SEC the Registration Statement on such applicable form covering the resale of all of the Registrable Securities.  The Company shall use its best efforts to have such Registration Statement declared effective by the SEC as soon as practicable, but in no event later than the applicable Effectiveness Deadline for such Registration Statement. If a Registration Statement covering the Registrable Securities is not filed with the SEC on or prior to the Filing Deadline and this is due to the Company’s not making a good faith effort to make such filing, the Company will make pro rata payments to the Purchaser, as liquidated damages and not as a penalty, in an amount equal to 1% of the aggregate amount invested by such Purchaser for each 30-day period or pro rata for any portion thereof following the Filing Deadline for which no Registration Statement is filed with respect to the Registrable Securities; provided, however, such damages shall cease to accrue on the 180th day following the Initial Closing Date.  Such payments shall constitute the Purchasers’ exclusive monetary remedy for such events, but shall not affect the right of the Purchaser to seek injunctive relief.  Such payments shall be made to the Purchaser in cash no later than two (2) Business Days after the first day of each 30-day period (in other words, the Company will pay to the Purchaser, in advance, the full amount of damages due and owing for such 30-day period).

 

  

  

  

(b)           Effectiveness. The Company shall use commercially reasonable efforts to have the Registration Statement declared effective as soon as practicable.  The Company shall notify the Purchaser by facsimile or e-mail as promptly as practicable, and in any event, within twenty-four (24) hours, after any Registration Statement is declared effective (the date of such first Registration Statement being declared effective, the “Effective Date”) and shall simultaneously provide the Purchaser with copies of any related Prospectus to be used in connection with the sale or other disposition of the securities covered thereby.  If (A) a Registration Statement covering the Registrable Securities is not declared effective by the SEC prior to Effectiveness Deadline due to the Company not exhibiting reasonable efforts to meet such Effectiveness Deadline, or (B) after a Registration Statement has been declared effective by the SEC, sales cannot be made pursuant to such Registration Statement for any reason (including without limitation by reason of a stop order, or the Company’s failure to update the Registration Statement), or the inability of the Purchaser to sell the Registrable Securities covered thereby due to market conditions, then the Company will make pro rata payments to the Purchaser, as liquidated damages and not as a penalty, in an amount equal to 1% of the aggregate amount invested by the Purchaser for each 30- day period or pro rata for any portion thereof following the date by which such Registration Statement should have been effective (the “Blackout Period”); provided, however, such damages shall cease to accrue pursuant to clause (A) above on the 180th day following the Closing Date.  Such payments shall constitute the Purchasers’ exclusive monetary remedy for such events, but shall not affect the right of the Purchaser to seek injunctive relief.  The amounts payable as liquidated damages pursuant to this paragraph shall be paid monthly within two (2) Business Days after the first day of each 30-day period (in other words, the Company will pay to the Purchaser, in advance, the full amount of damages due and owing for each such 30-day Blackout Period) until the termination of the Blackout Period.  Such payments shall be made to the Purchaser in cash.

 

Section 7.   Closing Conditions.

 

(a)           The obligation of the Company to consummate the transactions to be performed by it in connection with the Closing is subject to the following conditions being met:

 

(i)           the accuracy in all material respects on the Closing Date of the representations and warranties of each Purchaser contained herein (unless as of a specific date therein);

 

(ii)          all obligations, covenants and agreements of each Purchaser required to be performed at or prior to the Closing Date shall have been performed;

 

(iii)         the delivery by each Purchaser of this Agreement, duly executed by each such Purchaser;

 

  

  

  

(iv)           the delivery by each Purchaser, other than Purchasers that are not U.S. Persons, of a completed Investor Questionnaire in the form attached hereto as Exhibit A, duly executed by each such Purchaser; and

 

(b)           The respective obligations of the Purchasers to consummate the transactions to be performed by each of them in connection with the Closing are subject to the following conditions being met:

 

(i)             the accuracy in all material respects when made and on the Closing Date of the representations and warranties of the Company contained herein (unless as of a specific date therein);

 

(ii)            all obligations, covenants and agreements of the Company required to be performed at or prior to the Closing Date shall have been performed; and

 

(iii)           the delivery by the Company of this Agreement duly executed by the Company.

 

Section 8.  Price Protection For Shares. At the earlier of (a) the Effective Date; and (b) such time as the Shares can be sold pursuant to Rule 144 (the “Triggering Date”), the Shares shall be valued based on a 20% percent discount to the price of the common stock on the Effective Date of the Registration Statement (the “Shares Value”). In the event the Shares Value is less than $75,000, the Company shall issue additional shares of registered Common Stock, $0.001 par value per share of the Company, to the Purchaser (the “Additional Shares”) such that the total value of the Shares and the Additional Shares issued to the Purchaser by the Company, based on the Shares Value, shall total $75,000.    The Purchaser shall be deemed to have recertified the representations set forth in Section 5 upon the issuance of such Additional Shares.

 

Section 9.  Miscellaneous.

 

(a)           Restrictive Legend.  The Securities shall bear the following or similar legend:

 

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.”

 

(b)           Survival and Indemnification.

 

  

  

  

(i)           Survival.  The representations, warranties, covenants and agreements contained in this Agreement shall survive the Closing of the transactions contemplated by this Agreement.

 

(ii)           Indemnification.  Each Purchaser, severally and not jointly, agrees to indemnify and hold harmless the Company and its Affiliates and their respective directors, officers, employees and agents, and their respective successors and assigns, from and against any and all losses, claims, damages, liabilities and expenses (including without limitation reasonable attorney fees and disbursements and other expenses incurred in connection with investigating, preparing or defending any action, claim or proceeding, pending or threatened and the costs of enforcement thereof to) which such Person may become subject as a result of any breach of representation, warranty, covenant or agreement made by or to be performed on the part of such Purchaser under the Transaction Documents and will reimburse any such Person for all such amounts as they are incurred by such Person.

 

(c)           Successors and Assigns.  This Agreement may not be assigned by a party hereto without the prior written consent of the Company or the Purchasers, as applicable, provided, however, that a Purchaser may assign its rights and delegate its duties hereunder in whole or in part to an Affiliate or to a third party acquiring some or all of its Securities in a transaction complying with applicable securities laws without the prior written consent of the Company or the other Purchasers.  The provisions of this Agreement shall inure to the benefit of and be binding upon the respective permitted successors and assigns of the parties.

 

(d)           Counterparts. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart.  In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.

 

(e)           Construction; Headings.  This Agreement shall be deemed to be jointly drafted by the Company and the Purchasers and shall not be construed against any person as the drafter hereof. The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement.

 

 

  

  

  

(f)           Notices.  Unless otherwise provided, any notice required or permitted under this Agreement shall be given in writing and shall be deemed effectively given as hereinafter described (i) if given by personal delivery, then such notice shall be deemed given upon such delivery, (ii) if given by telex or telecopier, then such notice shall be deemed given upon receipt of confirmation of complete transmittal, (iii) if given by mail, then such notice shall be deemed given upon the earlier of (A) receipt of such notice by the recipient or (B) three days after such notice is deposited in first class mail, postage prepaid, and (iv) if given by an internationally recognized overnight air courier, then such notice shall be deemed given one Business Day after delivery to such carrier.  All notices shall be addressed to the party to be notified at the address as follows, or at such other address as such party may designate by ten days’ advance written notice to the other party:

 

If to the Company:

 

Jammin Java Corporation

8200 Wilshire Blvd., Suite 200

Beverly Hills, CA 90211

Attention: Anh Tran

 

With a copy to:

 

Anslow & Jaclin, LLP

195 Route 9 South, Suite 204

Manalapan, New Jersey 07726

Attention: Gregg E. Jaclin, Esq.

 

If to a Purchaser:

 

Fairhills Capital Offshore Ltd.

 245 Main Street, Suite 302

White Plains, NY 10601

 

(g)           Expenses.  The parties hereto shall pay their own costs and expenses in connection herewith. In the event that legal proceedings are commenced by any party to this Agreement against another party to this Agreement in connection with this Agreement or the other Transaction Documents, the party or parties which do not prevail in such proceedings shall severally, but not jointly, pay their pro rata share of the reasonable attorneys’ fees and other reasonable out-of-pocket costs and expenses incurred by the prevailing party in such proceedings.

 

(h)           Amendments and Waivers.  Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the holders of a majority of the then-outstanding aggregate Shares (the “Required Purchasers”).

 

(i)           Severability.  Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof but shall be interpreted as if it were written so as to be enforceable to the maximum extent permitted by applicable law, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.  To the extent permitted by applicable law, the parties hereby waive any provision of law which renders any provision hereof prohibited or unenforceable in any respect.

 

  

  

  

(j)           Entire Agreement.  This Agreement, including the Exhibits hereto, and the other Transaction Documents constitute the entire agreement among the parties hereof with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings, both oral and written, between the parties with respect to the subject matter hereof and thereof.

 

(k)           Further Assurances.  The parties shall execute and deliver all such further instruments and documents and take all such other actions as may reasonably be required to carry out the transactions contemplated hereby and to evidence the fulfillment of the agreements herein contained.

 

(l)           Governing Law; Consent to Jurisdiction; Waiver of Jury Trial.  This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of New York without regard to the choice of law principles thereof.  Each of the parties hereto irrevocably submits to the exclusive jurisdiction of the courts of the State of New York for the purpose of any suit, action, proceeding or judgment relating to or arising out of this Agreement and the transactions contemplated hereby.  Service of process in connection with any such suit, action or proceeding may be served on each party hereto anywhere in the world by the same methods as are specified for the giving of notices under this Agreement.  Each of the parties hereto irrevocably consents to the jurisdiction of any such court in any such suit, action or proceeding and to the laying of venue in such court.  Each party hereto irrevocably waives any objection to the laying of venue of any such suit, action or proceeding brought in such courts and irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.  EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS AGREEMENT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.

 

 

[Signatures follow on next page]

 

 

 

 

 

 

 

 

 

  

  

  

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed on the date first written above.

COMPANY:

 

	  	
JAMMIN JAVA CORPORATION

 

	  	
By: /s/ Anh Tran

	  	
Name: Anh Tran   

	  	
Title: President

 

PURCHASER:

 

	  	  
	  	
 
By: /s/ Edward Bronson

	  	
Name: Edward Bronson

	  	
Title:

	  	  
	  	
Address for Notice:

 

 

 

	  	
The Purchaser is a U.S. Person (check one):

	  	  
	  	
o Yes

	  	
o No

 

 

  

  

  

Schedule 4(c)

 

	
Name

	  	
Grant Date

	  	
Number of Securities 

Underlying Options

	  	
Exercise Price 

of Option Awards

	  	
Option Expiration Date

	  
	
Brent R. Toevs

	  	
08/10/11

	  	  	
1,000,000

	  	
$

	
0.40

	  	  	
08/10/17

	  
	
Anh T. Tran

	  	
08/05/11

	  	  	
2,000,000

	  	
$

	
0.40

	  	  	
08/05/17

	  
	
Rohan Marley

	  	
08/05/11

	  	  	
2,000,000

	  	
$

	
0.40

	  	  	
08/05/17

	  
	
Shane Whittle

	  	
08/05/11

	  	  	
2,000,000

	  	
$

	
0.40

	  	  	
08/05/17

	  
	
Paola Dooly

	  	
12/08/11

	  	  	
200,000

	  	
$

	
0.26

	  	  	
12/08/17

	  
	
Ray Pahlad

	  	
03/05/12

	  	  	
500,000

	  	
$

	
0.26

	  	  	
03/05/18

	  
	  	  	  	  	  	
7,700,000

	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  	  	  	  	  	  

The Company is obligated to issue Marley Coffee, LLC (“MCL”), 1,000,000 shares of common stock per year until March 31, 2020, pursuant to the terms of a Trademark License Agreement (the “License Agreement”) the Company entered into with MCL in March 2010.  The Company is also obligated to issue MCL 1,000,000 shares for fiscal 2012, which have not been issued to date.

 

In March 2010, the Company entered into the License Agreement with MCL, which was subsequently amended, a private limited liability company of which (i) Rohan Marley, one of the Company’s directors, has a 33% ownership interest (and collectively with his family, has a controlling interest) and serves as a Manager, and (ii) Shane Whittle, a former chief executive officer and director of the Company, has a 29% ownership interest and serves as a Manager. In consideration for the License Agreement Amendment, the Company agreed to assume $126,000 of obligations by paying MCL $55,000, with the balance being paid, with no interest, in equal monthly installments over a period of eighteen months.

 

The Company entered into Credit Agreement with TCA Global Credit Master Fund, Ltd. (“TCA”) effective June 29, 2012, pursuant to which the Company agreed to grant TCA shares of common stock equal to $100,000 in value (with a true-up in the event that TCA sells the shares and does not receive $100,000 in value).  Additionally, the Company borrowed $350,000 from TCA (with the right to borrow up to $2 million in aggregate pursuant to the terms of the Credit Agreement), which amount will be evidenced by promissory notes, which are convertible into the Company’s common stock, at the option of TCA, upon the occurrence of an event of default, at a conversion price equal to 85% of the lowest VWAP of the Company’s common stock on the five trading days prior to conversion.

 

  

  

  

EXHIBIT A

 

INVESTOR QUESTIONNAIRE

 

See attached.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

  

  

EXHIBIT B

 

NOTICE OF REGISTRATION STATEMENT AND

 

SELLING SECURITY HOLDER QUESTIONNAIRE

 

Reference is hereby made to Section 6 of this Securities Purchase Agreement between Jammin Java Corporation (the “Company”) and Fairhills Capital Offshore Ltd.  Pursuant to Section 6 of the Agreement, the Company proposes to file with the United States Securities and Exchange Commission (the “SEC”) a registration statement (the “Registration Statement”) for the registration and resale under Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”), of the Registrable Securities (as defined in the Securities Purchase Agreement).  All capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Agreement.

 

Pursuant to Section 6 of the Agreement, each beneficial owner of Registrable Securities is entitled to have the Registrable Securities beneficially owned by it included in the Registration Statement.  In order to have Registrable Securities included in the Registration Statement, this Notice of Registration Statement and Selling Securityholder Questionnaire (“Notice and Questionnaire”) must be completed, executed and delivered to the Company’s counsel at the address set forth herein for receipt ON OR BEFORE [DEADLINE FOR RESPONSE].  Beneficial owners of Registrable Securities who do not complete, execute and return this Notice and Questionnaire by such date (i) will not be named as selling securityholders in the Registration Statement and (ii) may not use the prospectus forming a part thereof for resales of Registrable Securities.

 

Certain legal consequences arise from being named as a selling securityholder in the Registration Statement and related prospectus.  Accordingly, holders and beneficial owners of Registrable Securities are advised to consult their own securities law counsel regarding the consequences of being named or not being named as a selling securityholder in the Registration Statement and related prospectus.

 

PLEASE FAX A COPY (OR EMAIL A .PDF COPY) OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE, AND RETURN THE ORIGINAL BY OVERNIGHT MAIL, TO:

 

[________________]

Attention: _______________

Telephone _______________

Fax _________________

Email: _______________

 

 

 

  

  

  

ELECTION

 

The undersigned holder (the “Selling Securityholder”) of Registrable Securities hereby elects to include in the Registration Statement the Registrable Securities beneficially owned by it and listed below in Item 3.  The Selling Securityholder, by signing and returning this Notice and Questionnaire, agrees to be bound with respect to such Registrable Securities by the terms and conditions of this Notice and Questionnaire  as if the undersigned Selling Securityholder were an original party thereto.

 

The Selling Securityholder hereby provides the following information to the Company and represents and warrants that such information is accurate and complete:

 

1.           Name.

 

(a)           Full legal name of Selling Securityholder:

 

	  

 

(b)           Full legal name of registered holder (if not the same as (a) above) of the Registrable Securities:

 

	  

 

(c)           Full legal name of DTC participant (if applicable and if not the same as (b) above) through which Registrable Securities are held:

 

	  

 

 

 

 

  

  

  

 

2.           Address for Notices to Selling Securityholder:

 

	  
	  
	  
	
Telephone:

	  
	
Fax:

	  
	
Contact Person:

	  

 

3.           Beneficial Ownership of the Registrable Securities beneficially owned by the Selling Securityholder.

 

Except as set forth below in this Item (3), the Selling Securityholder does not beneficially own any Securities.

 

	  	
(a)

	
Number or principal amount of Registrable Securities beneficially owned:

 

	
Shares

	  	
Series A

Warrant Shares

	  	
Series B

Warrant Shares

	  	  	  	  	  

 

(b)           If different than the number or principal amount of Registrable Securities set forth in Item 3(a), number or principal of amount of Registrable Securities which the Selling Securityholder wishes to be included in the Registration Statement:

 

	
Shares

	  	
Series A

Warrant Shares

	  	
Series B

Warrant Shares

	  	  	  	  	  

 

 

  

  

  

 

4.           Beneficial Ownership of other Securities of the Company beneficially owned by the Selling Securityholder.

 

Except as set forth below in this Item 4, the Selling Securityholder is not the beneficial or registered owner of any securities of the Company other than the Registrable Securities.

 

(a)           Type and Amount of other securities beneficially owned by the Selling Securityholder (do not list the Registrable Securities you listed in Item 3:

 

	  
	  

 

5.           Relationships with the Company:

 

Except as set forth below, neither the undersigned nor any of its affiliates, officers, directors or principal equity holders (owners of 5% of more of the equity securities of the undersigned) has held any position or office or has had any other material relationship with the Company (or its predecessors or affiliates) during the past three years.

 

State any exceptions here:

 

	  
	  

 

6.           Broker-Dealer Status:

 

(a)           Are you a broker-dealer?

 

Yes            ̈           No            ̈

 

(b)           If “yes” to Item 6(a), did you receive your Registrable Securities as compensation for investment banking services to the Company?

 

Yes            ̈           No            ̈

 

Note: If “no” to Item 6(b), the SEC may require the Company to identify you as an underwriter in the Registration Statement.

 

 

  

  

  

 

(c)           Are you an affiliate of a broker-dealer?

 

Yes            ̈           No            ̈

 

(d) If “yes” to Item (6)(c), identify the registered broker-dealer(s) and describe the nature of the affiliation(s):

 

	  
	  

 

(e)           If you are an affiliate of a broker-dealer, do you certify that you purchased the Registrable Securities in the ordinary course of business, and at the time of the purchase of the Registrable Securities to be resold, you had no agreements or understandings, directly or indirectly, with any person to distribute the Registrable Securities?

 

Yes            ̈           No            ̈

 

Note: If “no” to Item 6(e), the SEC may require the Company to identify you as an underwriter in the Registration Statement.

 

7.           Voting or Investment Control over the Registrable Securities:

 

(a)           If the Selling Securityholder is not a natural person (e.g., if the holder is an entity such as a trust, corporation, partnership, limited liability company, etc.), please identify the natural person or persons who have voting or investment control over the Registrable Securities listed in Item 3 above and the relationship to the Selling Securityholder (use additional sheets if necessary):

 

	  
	  

 

(b)           Please indicate whether any of the Registrable Securities to be sold are subject to a voting trust, and if so, please provide a copy of the voting trust agreement along with this Notice and Questionnaire:

 

	  
	  

 

  

  

  

 

The undersigned hereby further:

 

(i)           confirms to the Company the accuracy of the information concerning the undersigned contained in this Notice and Questionnaire furnished by the Selling Securityholder to the Company for purposes of the Registration Statement and the prospectus (preliminary or final) contained therein or in any amendment or supplement thereto or any documents incorporated by reference therein;

 

(ii)           agrees with the Company to immediately notify the Company and promptly (but in any event within two (2) Business Days thereafter) to confirm the same in writing if there should be any change affecting the accuracy of the above-mentioned information, or if the information regarding the Selling Securityholder’s holdings set forth in any version of the Registration Statement or any portion thereof delivered to the undersigned (including by electronic mail) or reviewed by the undersigned, should be inaccurate; and

 

(iii)           agrees with the Company that for purposes of the Subscription Agreement and Registration Statement, the statements contained herein constitute written information furnished by the Selling Securityholder to the Company for use in the Registration Statement, or any amendment or supplement thereto.

 

By signing below, the Selling Securityholder acknowledges that it understands its obligation to comply, and agrees that it will comply, with the provisions of the Exchange Act and the rules and regulations thereunder, particularly Regulation M.

 

By signing below, the Selling Securityholder consents to the disclosure of the information contained herein in its answers to Items 1 through 7 and the inclusion of such information in the Registration Statement and the related prospectus and any amendments or supplements thereto.  The Selling Securityholder understands that such information will be relied upon by the Company in connection with the preparation or amendment of the Registration Statement and the related prospectus and any amendments or supplements thereto.

 

Once this Notice and Questionnaire is executed by the Selling Securityholder and received by the Company’s counsel, the terms of this Notice and Questionnaire, and the representations and warranties contained herein, shall be binding on, shall inure to the benefit of and shall be enforceable by the respective successors, heirs, personal representatives, and assigns of the Company and the Selling Securityholder (with respect to the Registrable Securities beneficially owned by such Selling Securityholder and listed in Item 3 above.

 

[Signatures Follow on Next Page]

 

 

 

  

  

  

IN WITNESS WHEREOF the undersigned, by authority duly given, has caused this Notice and Questionnaire to be executed and delivered either in person or by its duly authorized agent.

 

	
Date:

	
                                                        

	  	  	
                                                        

	  	  	  	  	
Selling Securityholder

	  	  	  	  	
(Print/type full legal name of beneficial owner of Registrable Securities)

	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	
By:                                                         

	  	  	  	  	
Name:                                                         

	  	  	  	  	
Title:ex10-21.htm

Exhibit 10.21

 

JMP GROUP INC.

AMENDED AND RESTATED EQUITY INCENTIVE PLAN

COMPANY PERFORMANCE

NOTICE OF RESTRICTED STOCK UNIT AWARD

 

	
Grantee’s Name and Address:

	  	  
	  	  	  
	  	  	  

 

You (the “Grantee”) have been granted an award of Restricted Stock Units (the “Award”), subject to the terms and conditions of this Notice of Restricted Stock Unit Award (the “Notice”), the JMP Group Inc. Amended and Restated Equity Incentive Plan, as amended from time to time (the “Plan”) and the Restricted Stock Unit Agreement (the “Agreement”) attached hereto, as follows.  Unless otherwise provided herein, the terms in this Notice shall have the same meaning as those defined in the Plan.

 

	
Award Number

	  	  
	 	 	 
	
Date of Award

	  	
February 8, 2012

	 	 	 
	
Vesting Commencement Date

	  	
February 8, 2012

	 	 	 
	
Total Number of Restricted Stock

Units Awarded (the “Units”)

	  	  
	 	 	 
	
Expiration Date

	  	
Third Certification Date (as defined herein)

 

Vesting Schedule:

 

Subject to the Grantee’s Continuous Service, and any limitations set forth in this Notice, the Agreement and the Plan, the Units will “vest” in accordance with the following schedule (the “Vesting Schedule”).

 

Two conditions must be met before the Units will vest.  The first condition will be based on certification of the Company’s EPS, as set forth directly below.  The second condition will be based on the Grantee’s Continuous Service through December 31, 2014.

 

The Units will become eligible to vest on the date on which the Compensation Committee of the Board of Directors (the “Compensation Committee) certifies the EPS (as defined in this Notice) for the period from the Date of Award through December 31, 2012 (“Year 1”) (the “First Certification Date”).  In the event that the Units do not become eligible to vest on the First Certification Date, the Units will become eligible to vest on the date on which the Compensation Committee certifies the EPS for the period from January 1, 2013 through December 31, 2013 (“Year 2”) (the “Second Certification Date”).  In the event that the Units have not become eligible to vest immediately following the Second Certification Date, the Units will become eligible to vest on the date on which the Compensation Committee certifies the EPS for the period from January 1, 2014 through December 31, 2014 (the “Third Certification Date”).  Each Certification Date is anticipated to coincide with the filing of the Company’s Form 10-K with respect to the preceding year; provided, however, that the Administrator in its sole and absolute discretion may determine that any Certification Date shall occur on a different date.

 

  

  

  

 

If the Units become eligible to vest on one of the three above-mentioned Certification Dates, vesting will occur on December 31, 2014 provided the Grantee remains in Continuous Service as of that date.  Units may vest only once and upon vesting, the Award is extinguished.

 

For purposes of this Notice, “EPS” means the earnings per share of JMP Group Inc. common stock as reported in the Company’s annual audited financial statements which, for clarity, shall be the net income attributable to JMP Group Inc. per common share, diluted, excluding, in the Company’s sole and absolute discretion:

 

	
  

	
(i)

	
expenses attributable to employee equity compensation;

	
  

	
(ii)

	
acquired loan sale gains at JMP Credit as adjusted for compensation accruals and taxes;

	
  

	
(iii)

	
net amortization of liquidity discounts on asset backed securities and intangible assets at JMP Credit;

	
  

	
(iv)

	
unrealized gains and losses from publicly traded corporate strategic investments;

	
  

	
(v)

	
unrealized gains and losses from warrants, options or similar rights to acquire securities received in connection with corporate finance engagements or other services provided, as adjusted for compensation accruals; and

	
  

	
(vi)

	
any unusual or non-recurring charges in the Company's sole and absolute discretion.

 

All such amounts shall be as determined in accordance with generally accepted accounting principles (GAAP), or to the extent set forth as non-GAAP measures in the Company’s earnings announcements or internal reports, in accord with such methodologies and applied in the Company’s sole and absolute discretion to determine the EPS for a particular year for purposes of the Award.

 

The extent to which the Units become eligible to vest will depend upon the EPS in Year 1 (fiscal year 2012), Year 2 (fiscal year 2013) and Year 3 (fiscal year 2014) as follows.  EPS is measured per calendar/fiscal year and EPS amounts revert to zero with respect to each year under this Award:

 

Year 1 EPS - $0.65;

Year 2 EPS - $0.70; and

Year 3 EPS - $0.75.

Notwithstanding the foregoing, no more than 100% of the Total Number of Restricted Stock Units Awarded shall become vested.  For purposes of clarity, the Grantee’s Continuous Service must remain in effect through December 31, 2014 for any Units to vest.

 

In the event of a Change in Control, one hundred percent (100%) of the Units shall vest immediately prior to the effective date of such Change in Control so long as the Grantee remains in Continuous Service at that time; provided for the avoidance of doubt, however, that this provision shall apply to a Corporate Transaction only if such transaction is a Change in Control.

 

  

2

  

 

In the event of the Grantee’s change in status from Employee to Consultant or Director, the determination of whether such change in status results in a termination of Continuous Service will be determined in accordance with Section 409A of the Internal Revenue Code (the “Code”).

 

For purposes of this Notice and the Agreement, the term “vest” shall mean, with respect to any Units, that such Units are no longer subject to forfeiture to the Company.

 

Vesting shall cease upon the date the Grantee terminates Continuous Service for any reason, whether the decision to terminate Continuous Service is made to the Company or the Grantee, excluding death or Permanent Disability (as defined in this Notice).  In the event the Grantee terminates Continuous Service for any reason, excluding death or Permanent Disability, any unvested Units held by the Grantee immediately following such termination of the Grantee’s Continuous Service shall be forfeited and deemed reconveyed to the Company and the Company shall thereafter be the legal and beneficial owner of such reconveyed Units and shall have all rights and interest in or related thereto without further action by the Grantee.

 

Notwithstanding anything else written herein, in the event of the Grantee’s death, any unvested Units held by the Grantee immediately prior to his or her death shall continue to vest, if at all, in accordance with the Vesting Schedule set forth above.

 

In the event of the Grantee’s termination of Continuous Service due to Permanent Disability, any unvested Units held by the Grantee immediately following such termination of Continuous Service shall continue to vest, if at all, in accordance with the Vesting Schedule set forth above; provided, however, that such vesting shall not be subject to the Grantee’s Continuous Service during the period in which the Grantee’s Permanent Disability remains in effect.  Notwithstanding the foregoing, if the Grantee’s Permanent Disability ceases, any further vesting of the Units thereafter shall be subject to the Grantee’s Continuous Service.  If the Grantee does not resume Continuous Service immediately following cessation of his or her Permanent Disability (other than due to death), then any unvested Units held by the Grantee immediately following such cessation of Permanent Disability shall be forfeited and deemed reconveyed to the Company and the Company shall thereafter be the legal and beneficial owner of such reconveyed Units and shall have all rights and interest in or related thereto without further action by the Grantee.  For purposes of this Notice, “Permanent Disability” means any period during which the Grantee is entitled to receive benefits under the Company’s long-term disability policy in effect as of the termination of the Grantee’s Continuous Service as a result of the carrier of such policy deeming the Grantee to be disabled (ignoring for purposes of this Agreement any waiting period prior to the commencement of benefit payments and any lump-sum settlement of any such policy liability to make on-going benefit payments).

 

IN WITNESS WHEREOF, the Company and the Grantee have executed this Notice and agree that the Award is to be governed by the terms and conditions of this Notice, the Plan, and the Agreement.

 

	 	

JMP GROUP INC.

	 
	 	

a Delaware corporation

	 
	 	 	 	 
	
 

	 	 	 
	 	By:	

Raymond Jackson

	 
	 	Title:	
Chief Financial Officer

	 

 

  

3

  

 

THE GRANTEE ACKNOWLEDGES AND AGREES THAT THE UNITS SHALL VEST, IF AT ALL, ONLY DURING THE PERIOD OF THE GRANTEE’S CONTINUOUS SERVICE OR AS OTHERWISE SPECIFICALLY PROVIDED HEREIN (NOT THROUGH THE ACT OF BEING HIRED OR BEING GRANTED THIS AWARD).  THE GRANTEE FURTHER ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS NOTICE, THE AGREEMENT, NOR IN THE PLAN, SHALL CONFER UPON THE GRANTEE ANY RIGHT WITH RESPECT TO CONTINUATION OF THE GRANTEE’S CONTINUOUS SERVICE, NOR SHALL IT INTERFERE IN ANY WAY WITH THE GRANTEE’S RIGHT OR THE COMPANY’S RIGHT TO TERMINATE THE GRANTEE’S CONTINUOUS SERVICE AT ANY TIME, WITH OR WITHOUT CAUSE, AND WITH OR WITHOUT NOTICE.  THE GRANTEE ACKNOWLEDGES THAT UNLESS THE GRANTEE HAS A WRITTEN EMPLOYMENT AGREEMENT WITH THE COMPANY TO THE CONTRARY, THE GRANTEE’S STATUS IS AT WILL.

 

Grantee Acknowledges and Agrees:

 

The Grantee acknowledges receipt of a copy of the Plan and the Agreement and represents that he or she is familiar with the terms and provisions thereof, and hereby accepts the Award subject to all of the terms and provisions hereof and thereof.  The Grantee has reviewed this Notice, the Agreement and the Plan in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Notice and fully understands all provisions of this Notice, the Agreement and the Plan.  The Grantee further agrees and acknowledges that this Award is a non-elective arrangement pursuant to Section 409A of the Code.

 

The Grantee further acknowledges that, from time to time, the Company may be in a “blackout period” and/or subject to applicable federal securities laws that could subject the Grantee to liability for engaging in any transaction involving the sale of the Company’s Shares.  The Grantee further acknowledges and agrees that, prior to the sale of any Shares acquired under this Award, it is the Grantee’s responsibility to determine whether or not such sale of Shares will subject the Grantee to liability under insider trading rules or other applicable federal securities laws.

 

The Grantee understands that the Award is subject to the Grantee’s consent to access this Notice, the Agreement, the Plan and the Plan prospectus (collectively, the “Plan Documents”) in electronic form on the Company’s Employee Access website at www.employease.com or otherwise.  By signing below (or by providing an electronic signature) and accepting the grant of the Award, the Grantee: (i) consents to access electronic copies (instead of receiving paper copies) of the Plan Documents via the Company’s Employee Access website t; (ii) represents that the Grantee has access to the Company’s Employee Access website or otherwise; (iii) acknowledges receipt of electronic copies, or that the Grantee is already in possession of paper copies, of the Plan Documents; and (iv) acknowledges that the Grantee is familiar with and accepts the Award subject to the terms and provisions of the Plan Documents.

 

  

  

  

 

The Grantee hereby agrees that all questions of interpretation and administration relating to this Notice, the Plan and the Agreement shall be resolved by the Administrator in accordance with Section 9 of the Agreement.  The Grantee further agrees to the venue and jurisdiction selection in accordance with Sections 7 and 10 of the Agreement.  The Grantee further agrees to notify the Company upon any change in his or her residence address indicated in this Notice.

 

	
Date:

	  	  	  
	  	  	
Grantee’s Signature

	 	 	 
	  	  	  
	  	  	
Grantee’s Printed Name

	 	 	 
	  	  	  
	  	  	
Address

	 	 	 
	  	  	  
	  	  	
City, State & Zip

 

  

  

  

 

Award Number:  ____

 

JMP GROUP INC.

AMENDED AND RESATED EQUITY INCENTIVE PLAN

RESTRICTED STOCK UNIT AGREEMENT

 

 

1.             Issuance of Units.  JMP Group Inc., a Delaware corporation (the “Company”), hereby issues to the Grantee (the “Grantee”) named in the Notice of Restricted Stock Unit Award (the “Notice”) an award (the “Award”) of the Total Number of Restricted Stock Units Awarded set forth in the Notice (the “Units”), subject to the Notice, this Restricted Stock Unit Agreement (the “Agreement”) and the terms and provisions of the JMP Group Inc. Amended and Restated Equity Incentive Plan, as amended from time to time (the “Plan”), which is incorporated herein by reference.  Unless otherwise provided herein, the terms in this Agreement shall have the same meaning as those defined in the Plan.

 

2.             Conversion of Units and Issuance of Shares.

 

(a)           General.  Subject to Section 2(b) and (c), one share of Common Stock shall be issuable for each Unit subject to the Award (the “Shares”) upon vesting.  Immediately prior to the specified effective date of a Change in Control (as defined in the Plan) and subject to Section 2(b) and (c), vesting shall accelerate and one Share shall be issuable for each Unit subject to the Award.  Within ten (10) business days thereafter, or as soon as administratively feasible, the Company will transfer the appropriate number of Shares to the Grantee after satisfaction of any required tax or other withholding obligations.  Notwithstanding the foregoing, the relevant number of Shares shall be issued no later than March 15th of the year following the calendar year in which the Award vests.  Any fractional Unit remaining after the Award is fully vested shall be discarded and shall not be converted into a fractional Share.  Notwithstanding the foregoing, the Company may, in its sole discretion, make a cash payment in lieu of the issuance of the Shares in an amount equal to the value of one share of Common Stock multiplied by the number of then vested Units subject to the Award.

 

(b)           Delay of Conversion.  The conversion of the Units into the Shares under Section 2(a) above shall be delayed in the event the Company reasonably anticipates that the issuance of the Shares would constitute a violation of federal securities laws or other Applicable Law.  If the conversion of the Units into the Shares is delayed by the provisions of this Section 2(b), the conversion of the Units into the Shares shall occur at the earliest date at which the Company reasonably anticipates issuing the Shares will not cause a violation of federal securities laws or other Applicable Law.  For purposes of this Section 2(b), the issuance of Shares that would cause inclusion in gross income or the application of any penalty provision or other provision of the Code is not considered a violation of Applicable Law.

 

  

  

  

 

(c)           Delay of Issuance of Shares.  The Company shall have the authority to delay the issuance of any Shares under this Section 2 to the extent it deems necessary or appropriate to comply with Section 409A(a)(2)(B)(i) of the Code (relating to payments made to certain “specified employees” of certain publicly-traded companies); in such event, any Shares to which the Grantee would otherwise be entitled during the six (6) month period following the date of the Grantee’s termination of Continuous Service will be issuable on the first business day following the expiration of such six (6) month period..

 

3.             Transfer Restrictions and Right to Shares.  The Units may not be transferred in any manner other than by will or by the laws of descent and distribution.  Notwithstanding the foregoing, the Grantee may designate one or more beneficiaries of the Units in the event of the Grantee’s death on a beneficiary designation form provided by the Administrator.  The terms of the Units shall be binding upon the executors, administrators, heirs, successors and transferees of the Grantee.  The Grantee shall not have any right in, to or with respect to any of the Shares (including any voting rights or rights with respect to dividends paid on the Common Stock) issuable under the Award until the Award is settled by the issuance of such Shares to the Grantee.

 

4.             Covenants.

 

(a)           Confidential Information.  The Grantee hereby acknowledges that unauthorized disclosure of Confidential Information to third parties outside the Company will cause the Company substantial, immediate and irreparable harm.  For purposes of this Agreement, “Confidential Information” means non-public information concerning the Company and its clients, including without limitation, information concerning the Company’s and its clients’ businesses, strategies, operations, financial affairs, organizational and personnel matters, policies and procedures.  Confidential Information may have been or be provided in written or electronic form or orally.  In consideration of this Award and in consideration of, and as a condition to, continued access to Confidential Information, and without prejudice to or limitation on any other confidentiality obligations imposed by agreement or by law, the Grantee hereby undertakes to use and protect Confidential Information in accordance with any restrictions placed on its use or disclosure.  Without limiting the foregoing, except as authorized by the Company or as required by Applicable Law, the Grantee may not disclose or allow disclosure of any Confidential Information, or of any information derived therefrom, in whatever form, to any person unless such person is a director, officer, partner, employee, attorney or agent of the Company and, in the Grantee’s reasonable good faith judgment, has a need to know the Confidential Information or information derived therefrom in furtherance of the business of the Company.  The Grantee may not take or use Confidential Information for his or her own purposes, or purposes of third parties, either directly or indirectly, including, without limitation, for the purpose of furthering current or future employment outside the Company or for outside activities, personal gain or profit.  The Company reserves the right to avail itself of all legal or equitable remedies, including preliminary injunction and restraining order, to prevent impermissible use of Confidential Information and/or to recover damages incurred as a result of such use of Confidential Information.  The foregoing obligations will survive, and remain binding and enforceable notwithstanding any termination of the Grantee’s Continuous Service and any settlement of the financial rights and obligations arising from the Grantee’s Continuous Service.  Without limiting the foregoing, the existence of, and any information concerning, any dispute between the Grantee and the Company shall constitute Confidential Information except that the Grantee may disclose information concerning such dispute to the arbitrator or other trier of fact who is considering such dispute, or to the Grantee’s legal counsel (provided that such counsel agrees not to disclose any such information other than as necessary to the prosecution or defense of the dispute).

 

  

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(b)           Competitive Activities.  In consideration of this Award and to the extent permitted by applicable law, Grantee hereby agrees that during the Grantee’s Continuous Service and for a period of one year following his or her termination of Continuous Service due to voluntary resignation from the Company, he or she will not, without the prior written consent of the Executive Committee of the Board (the “Executive Committee”), which consent may be withheld in its sole and absolute discretion, (A) form, or acquire a five percent (5%) or greater equity ownership, voting or profit participation interest in, any Competitive Enterprise (as defined herein); or (B) associate (including, but not limited to, association as an officer, employee, partner, director, consultant, agent or advisor) with any Competitive Enterprise and in connection with such association engage in, or directly or indirectly manage or supervise personnel engaged in, any activity (x) which is similar or substantially related to any activity in which the Grantee was engaged, in whole or in part, at the Company, or (y) for which the Grantee had direct or indirect managerial or supervisory responsibility at the Company.  For purposes of this Agreement, a “Competitive Enterprise” is a business enterprise located within the United States that engages in, or owns or controls a significant interest in any entity that engages in, financial services activity that competes directly or indirectly with the Company, including, without limitation, investment banking; underwriting; placement agent activities; public or private finance; financial advisory services; investment advice; merchant banking; asset or hedge fund management; private equity or other public or private investment funds; real estate investments, services or vehicles; securities research, brokerage, sales, lending, custody, clearance, settlement or trading; or any similar activities or provision of services or products (all of the foregoing for anyone other than the Grantee and members of the Grantee’s family and in such case, the Grantee shall provide full, complete and accurate disclosure to the Board upon its request with respect to such activities (including, without limitation, supporting trade data)).

 

(c)            Solicitation of Clients.  In consideration of this Award and to the extent permitted by applicable law, Grantee hereby agrees that during the Grantee's Continuous Service and for a period of one year following the termination of his or her Continuous Service, Grantee will not, in any manner, directly or indirectly, (A) Solicit a Client (each as defined herein) to transact business with a Competitive Enterprise or to reduce or refrain from doing any business with the Company, (B) interfere with or damage (or attempt to interfere with or damages) any relationship between the Company and a Client or (C) divert business opportunities away from the Company.  For purposes of this Agreement, the term “Solicit” means any direct or indirect communication of any kind whatsoever, regardless of by whom initiated, inviting, advising, encouraging or requesting any person or entity, in any manner, to take or refrain from taking any action and the term “Client” means any client or prospective client of the Company to whom the Grantee provided services, or for whom the Grantee transacted business, or from whom the Grantee solicited business within one year prior to termination of the Grantee’s Continuous Service with the Company.  This restriction is understood to be inherently reasonable in its geography because it is limited to the places where said Client(s) do business.  However, for any jurisdiction where an additional geographic restriction is necessary to make this provision enforceable, it shall be considered limited in its geographic scope to the lesser of (a) Grantee’s assigned area of geographic responsibility if the Company assigned Grantee a geographic territory, or (b) those states within the United States, and those comparable political subdivisions of other countries, where the Company does business or is actively planning to do business during Grantee’s employment and where Grantee has involvement and contact with Clients of the Company.

 

  

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(d)           Solicitation of Employees.  In consideration of this Award, the Grantee hereby agrees that during the Grantee’s Continuous Service and for a period of one year following the termination of his or her Continuous Service, Grantee will not, in any manner, directly or indirectly, Solicit any person who is an Employee to resign from the Company or to apply for or accept employment with any Competitive Enterprise.

 

(e)           Garden Leave.  In consideration of this Award and to the extent permitted by applicable law, the Grantee hereby agrees that during the Coverage Period, the Executive Committee may, in its sole and absolute discretion, continue Grantee’s employment, pay the Grantee’s base salary or draw, as applicable, and require that the Grantee refrain from engaging in any other employment or business activities until the Executive Committee determines the Client relationships are transferred to the Company.  The Grantee may continue to participate in any benefit plan for which he or she continues to be eligible, subject to the payment of necessary premiums.  The Grantee will not receive or participate in any incentive pay or bonus arrangements.  During the Coverage Period, the Grantee will not be required to perform any duties for the Company.  During the Coverage Period, the Company may, in its sole discretion, deny or restrict the Grantee’s access to the Company’s clients, customers, premises, Confidential Information and telephone and computer systems.  For purposes of this Agreement, the term “Coverage Period” means, at the discretion of the Executive Committee, either the 90-day period beginning on the date on which notice of the Grantee’s termination of Continuous Service is delivered to or by the Company or the 90-day period beginning on the date of termination of the Grantee’s Continuous Service.  The Company may, in its sole discretion, elect not to invoke, or to shorten, the duration of, the Coverage Period.  If the Company elects to terminate the Coverage Period early, the Company will not continue to pay, or provide benefits to, the Grantee.  In the event of any breach of this provision by the Grantee, the Company will have no obligation to continue providing compensation or benefits to Grantee.  Grantee acknowledges that a breach of his or her obligations hereunder would cause irreparable damage to the Company and monetary damages alone would be an insufficient remedy for such a breach.  Therefore, the Company, in addition to any other rights or remedies that it may have, will be entitled to a preliminary or temporary injunctive order restraining Grantee from violating or continuing to violate such obligations.  This Policy does not alter Grantee’s at-will employment status with the Company.

 

(f)           Reasonable Scope.  Grantee acknowledges and agrees that the covenants and agreements contained herein are reasonable and valid in geographic, temporal and subject matter scope and in all other respects, and do not impose limitations greater than are necessary to protect the trade secrets, Confidential Information, client relationships, goodwill, and other legitimate business interests of the Company.

 

  

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(g)           Extended Duration of Covenants.  The duration of the non-solicitation, non-competition and garden leave clauses set forth in Paragraphs 4(b) – (e) shall be extended by the length of time of any litigation relating to the enforcement of these clauses.

 

5.      Taxes.

 

(a)           Tax Liability.  The Grantee is ultimately liable and responsible for all taxes owed by the Grantee in connection with the Award, regardless of any action the Company or any Related Entity takes with respect to any tax withholding obligations that arise in connection with the Award.  Neither the Company nor any Related Entity makes any representation or undertaking regarding the treatment of any tax withholding in connection with the grant or vesting of the Award or the subsequent sale of Shares issuable pursuant to the Award.  The Company does not commit and is under no obligation to structure the Award to reduce or eliminate the Grantee’s tax liability.  The Grantee does not have discretion to direct the Company to withhold any amount in excess of the minimum statutory tax withholding requirements, to make any such excess tax payments on behalf of the Grantee, or to withhold or pay any amount in satisfaction of the Grantee’s other tax liabilities.

 

(b)           Payment of Withholding Taxes.  Prior to any event in connection with the Award (e.g., vesting) that the Company determines may result in any tax withholding obligation, whether United States federal, state, local or non-U.S., including any employment tax obligation (the “Tax Withholding Obligation”), the Grantee must arrange for the satisfaction of the minimum amount of such Tax Withholding Obligation in a manner acceptable to the Company.  Under no circumstances will the Company be obligated to withhold any amount in excess of the minimum Tax Withholding Obligation, or to withhold or pay any additional amount in satisfaction of the Grantee’s other tax liabilities.

 

(i)           By Share Withholding.  The Grantee authorizes the Company to, upon the exercise of its sole discretion, withhold from those Shares issuable to the Grantee the whole number of Shares sufficient to satisfy the minimum applicable Tax Withholding Obligation.  The Grantee acknowledges that the withheld Shares may not be sufficient to satisfy the Grantee’s minimum Tax Withholding Obligation.  Accordingly, the Grantee agrees to pay to the Company or any Related Entity as soon as practicable, including through additional payroll withholding, any amount of the Tax Withholding Obligation that is not satisfied by the withholding of Shares described above.

 

(ii)           By Sale of Shares.  Unless the Grantee determines to satisfy the Tax Withholding Obligation by some other means in accordance with clause (iii) below, the Grantee’s acceptance of this Award constitutes the Grantee’s instruction and authorization to the Company and any brokerage firm determined acceptable to the Company for such purpose to, upon the exercise of Company’s sole discretion, sell on the Grantee’s behalf a whole number of Shares from those Shares issuable to the Grantee as the Company determines to be appropriate to generate cash proceeds sufficient to satisfy the minimum applicable Tax Withholding Obligation.  Such Shares will be sold on the day such Tax Withholding Obligation arises (e.g., a vesting date) or as soon thereafter as practicable.  The Grantee will be responsible for all broker’s fees and other costs of sale, and the Grantee agrees to indemnify and hold the Company harmless from any losses, costs, damages, or expenses relating to any such sale.  To the extent the proceeds of such sale exceed the Grantee’s minimum Tax Withholding Obligation, the Company agrees to pay such excess in cash to the Grantee.  The Grantee acknowledges that the Company or its designee is under no obligation to arrange for such sale at any particular price, and that the proceeds of any such sale may not be sufficient to satisfy the Grantee’s minimum Tax Withholding Obligation.  Accordingly, the Grantee agrees to pay to the Company or any Related Entity as soon as practicable, including through additional payroll withholding, any amount of the Tax Withholding Obligation that is not satisfied by the sale of Shares described above.

 

  

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(iii)           By Check, Wire Transfer or Other Means. At any time not less than five (5) business days (or such fewer number of business days as determined by the Administrator) before any Tax Withholding Obligation arises (e.g., a vesting date), the Grantee may elect to satisfy the Grantee’s Tax Withholding Obligation by delivering to the Company an amount that the Company determines is sufficient to satisfy the Tax Withholding Obligation by (x) wire transfer to such account as the Company may direct, (y) delivery of a certified check payable to the Company, or (z) such other means as specified from time to time by the Administrator.

 

Notwithstanding the foregoing, the Company or a Related Entity also may satisfy any Tax Withholding Obligation by offsetting any amounts (including, but not limited to, salary, bonus and severance payments) payable to the Grantee by the Company and/or a Related Entity.

 

6.           Entire Agreement; Severability; Blue Pencil.  The Notice, the Plan and this Agreement constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and the Grantee with respect to the subject matter hereof, and may not be modified adversely to the Grantee’s interest except by means of a writing signed by the Company and the Grantee.  Should any provision of the Notice, the Plan or the Agreement be determined to be illegal or unenforceable, only such provision or provisions shall be invalid and will not invalidate the remaining provisions.  The other provisions shall remain effective and shall remain enforceable, and if possible, the invalid term shall be revised, or a new valid term provided, to preserve the original intent of the parties.  If any court determines that any of the covenants and agreements, or any part thereof, is invalid or unenforceable because of the duration or scope of such provision, such court shall have the power to reduce the duration or scope of such provision, as the case may be, and, in its reduced form, such provision shall then be enforceable to the maximum extent permitted by applicable law.

 

7.           Governing Law.  These agreements are to be construed in accordance with and governed by the internal laws of the State of Delaware without giving effect to any choice of law rule that would cause the application of the laws of any jurisdiction other than the internal laws of the State of Delaware to the rights and duties of the parties.

 

8.           Construction.  The captions used in the Notice and this Agreement are inserted for convenience and shall not be deemed a part of the Award for construction or interpretation.  Except when otherwise indicated by the context, the singular shall include the plural and the plural shall include the singular.  Use of the term “or” is not intended to be exclusive, unless the context clearly requires otherwise.

 

  

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9.           Administration and Interpretation.  Any question or dispute regarding the administration or interpretation of the Notice, the Plan or this Agreement shall be submitted by the Grantee or by the Company to the Administrator.  The resolution of such question or dispute by the Administrator shall be final and binding on all persons.

 

10.         Arbitration.  The parties agree that any dispute, controversy or claim, action, or proceeding arising out of or relating to the Notice, the Plan or this Agreement, or arising out of Grantee’s employment with the Company or otherwise concerning any rights, obligations or other aspects of such Grantee’s employment relationship with respect to the Company or with respect to the Notice, the Plan or this Agreement shall be brought exclusively through final and binding arbitration. This Agreement is intended to apply to the resolution of disputes that otherwise would be resolved in a court of law, and therefore this Agreement requires all such disputes to be resolved only by an arbitrator through final and binding arbitration and not by way of court or jury trial. Such disputes include without limitation disputes arising out of or relating to interpretation or application of this Agreement, including the arbitrability, enforceability, revocability or validity of the Agreement or any portion of the Agreement. The arbitration shall be held in the City and State where Grantee is or was employed by the Company, and  shall be conducted before, and in accordance with the rules then obtaining of, FINRA or, if FINRA declines to arbitrate the matter, the American Arbitration Association (the “AAA”) in accordance with the commercial arbitration rules of the AAA.   This Agreement is governed by the Federal Arbitration Act, 9 U.S.C. § 1 et seq. and evidences a transaction involving commerce. Nothing in this Agreement shall be deemed to preclude or excuse a party from bringing an administrative claim before any agency in order to fulfill the party's obligation to exhaust administrative remedies before making a claim in arbitration. A party may apply to a court of competent jurisdiction for temporary or preliminary injunctive relief in connection with an arbitrable controversy, but only upon the ground that the award to which that party may be entitled may be rendered ineffectual without such provisional relief. The Grantee shall keep confidential all matters relating to, and all communications, whether oral, written or electronic, in connection with any such arbitration proceedings.  Each party shall bear his, her or its own legal fees, costs and expenses of any such arbitration proceedings.  Regardless of any other terms of this Agreement, claims may be brought before and remedies awarded by an administrative agency if applicable law permits access to such an agency notwithstanding the existence of an agreement to arbitrate. Disputes that may not be subject to predispute arbitration agreements as provided by the Dodd-Frank Wall Street Reform and Consumer Protection Act (Public Law 111-203) are excluded from the coverage of this Agreement. The parties irrevocably waive, to the fullest extent permitted by law, any objection the party may have to the arbitration of any such claim, controversy, action or proceeding before FINRA.  If any one or more provisions of this Section 10 shall for any reason be held invalid or unenforceable, it is the specific intent of the parties that such provisions shall be modified to the minimum extent necessary to make it or its application valid and enforceable

 

11.         Notices.  Any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given upon personal delivery, upon deposit for delivery by an internationally recognized express mail courier service or upon deposit in the United States mail by certified mail (if the parties are within the United States), with postage and fees prepaid, addressed to the other party at its address as shown in these instruments, or to such other address as such party may designate in writing from time to time to the other party.

 

  

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12.         Amendment and Delay to Meet the Requirements of Section 409A.  The Grantee acknowledges that the Company, in the exercise of its sole discretion and without the consent of the Grantee, may amend or modify this Agreement in any manner and delay the issuance of any Shares issuable pursuant to this Agreement to the minimum extent necessary to meet the requirements of Section 409A of the Code as amplified by any Treasury regulations or guidance from the Internal Revenue Service as the Company deems appropriate or advisable.

 

END OF AGREEMENT

 

 

 

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