Exhibit 10.40
STAR ASSOCIATES, LLC
March 15, 2003
Ventures-National Incorporated
Dba Titan General Holdings, Inc.
00000 Xxx Xxxx Xxxxxxx Xxxx
Xxxxxxx XX 00000
Attention: XX Xxxxx
CEO
Dear JP:
We are pleased to set forth the terms of the addendum ("the Addendum")
to the Agreement (the "Titan Agreement") between STAR Associates, LLC
(hereinafter "STAR" or the "Consultant") dated JULY 29, 2002, and
Ventures-National Incorporated (hereinafter referred to in this Agreement
collectively as the "Company"). All capitalized terms used, but not otherwise
defined, herein shall have the respective definitions assigned thereto in the
Titan Agreement.
1. In addition to STAR's duties as outlined in the Titan Agreement, STAR
will assist the Company as its non-exclusive advisor, finder, and agent
in connection the following proposed activities:
(a) providing advice as to the structure of debt and equity
financing of the Company;
(b) assisting the Company in the identification and selection of
appropriate members of management, Board of Directors, and
advisory board members;
(c) otherwise assisting the Company with advancing its business
objectives, including analyzing the Company's business and
capital structure models; and
(d) assisting in the management of the daily business affairs of
the Company as needed from time to time.
2. In connection with STAR's activities on the Company's behalf, the
Company will cooperate with STAR and will furnish STAR with all
information and data concerning the Company, any Transaction, and, to
the extent available to the Company (the "Information") which STAR
deems appropriate and will provide STAR with access to the Company's
officers, directors, employees, independent accountants, and legal
counsel. To the extent that the Company has access to the officers,
directors, employees, independent accountants, and legal counsel of the
Target, it will provide such access to STAR. The Company represents and
warrants that all Information (a) made available to STAR by the Company
or (b) contained in any filing by the Company with any court or
governmental regulatory agency, commission, or instrumentality with
respect to any Transaction will, at all times during the period of the
engagement of STAR hereunder, be complete and correct in all material
respects and will not contain any untrue statement of a material fact
or omit to state a material fact necessary in order to make the
statements therein not misleading. The Company further represents and
warrants that any projections provided by it to STAR will have been
prepared in good faith and will be based upon assumptions, which, in
light of the circumstances under which they are made, are reasonable.
The Company acknowledges and agrees that,
STAR ASSOCIATES, LLC
Titan Addendum March 15, 2003
Page 2
in rendering its services hereunder, STAR will be using and relying on
the Information (and information available from public sources and
other sources deemed reliable by STAR) without independent verification
thereof by STAR or independent appraisal by STAR of any of the Company
or the Company's assets or of the Target or the Target's assets. STAR
does not assume responsibility for the accuracy or completeness of the
Information or any other information regarding the Target, the Company,
or any Transaction. Any advice rendered by STAR pursuant to this
Agreement may not be disclosed publicly without STAR's prior written
consent.
3. In consideration of our services pursuant to this Agreement, STAR shall be
entitled to receive, and the Company agrees to pay STAR aggregate fees as
follows:
(a) Consultant's fees as follows: (i) cash in an amount equal to
$18,000 per month for a period of one year (the "Period")
beginning April 1, 2003 and automatically renewable for six
month Periods thereafter unless any party hereto shall deliver
to the other notice of termination within 60 days prior to the
termination of the Period (or the Period as theretofore
extended).
(b) Warrants to purchase 200,000 (two-hundred-thousand) shares of
common stock. Said Warrants shall be issued to STAR within
thirty days of signing this Addendum and shall be considered
due in full upon the signing of this Addendum.
(c) Such Warrants shall be exercisable at a price of $2.00
(two-dollar) per share of common stock and for a period of
five years commencing on the date of this Addendum. Such
Warrants shall provide for adjustment of the exercise price
thereof and the number of shares of Common Stock issueable
upon the exercise thereof in the event of (i) the declaration
of dividends on the outstanding Common Stock payable in shares
of its capital stock; (ii) subdivision of the outstanding
Common Stock; (iii) combination of the outstanding Common
Stock into a smaller number of shares; or (iv) issuance of any
shares of its capital stock by reclassification of the Common
Stock (including any such reclassification in connection with
a consolidation or merger in which the Company is the
continuing corporation). Such Warrants shall also have a
cashless exercise provision or a net-issuance provision
attached to each exercise of the Warrants and the choice of
the provision described herein shall be made by STAR.
(d) All consultant fees described in section `(a)' above shall be
due on the first of the current month and paid to STAR no
later than the fifth of said month. In addition, the balance
of each Period (one year for the initial Period [April 2003
thru March 2004] and six months for each subsequent Period)
shall be due in full in the event that the Company terminates
STAR for any reason during said period.
(e) In the event that the Company fails to pay STAR as described
herein for a period in excess of forty days without STAR's
written permission, then STAR shall have the right to use any
means necessary including filing a lien against the Company or
any of its subsidiaries and the Company shall be responsible
for the cost of any means taken to obtain the consideration
due STAR under this Addendum or any other STAR Agreement with
the Company. In the event that, for any reason, the Company
shall fail to pay to STAR all or any portion of the
compensation otherwise due thereto pursuant to this Addendum,
interest shall accrue on such amount and shall be payable on
the unpaid balance due hereunder from the date such amount was
due through and including the date actually received by STAR
at the rate of interest equal to two points over the prime
rate of interest as determined by Citibank, N.A. in New York,
New York, computed on a daily basis and adjusted as announced
from time to time.
STAR ASSOCIATES, LLC
Titan Addendum March 15, 2003
Page 3
(f) It is understood that significant work has already been done by
STAR in arrears to this Addendum and, therefore, considered
additional efforts to be covered through the consideration
described herein.
All monetary fees shall be made payable to the order of STAR
Associates, LLC and mailed to PO box 129 Olney Maryland 20830.
4 In addition to the fees described in paragraph 3 above, the Company agrees to
promptly reimburse STAR upon request for all out-of-pocket expenses incurred by
STAR (including fees and disbursements of counsel, and of other consultants and
advisors retained by STAR which are approved by the Company) in connection with
the matters contemplated by this Agreement or in collection of consideration
described herein.
5. The Company agrees to indemnify STAR in accordance with the indemnification
provisions (the "Indemnification Provisions") attached to this Agreement, which
Indemnification Provisions are incorporated herein and made a part hereof.
6. The term of this Agreement shall commence on the date hereof and expire as
described in section 3(a) herein. Notwithstanding the foregoing, either party
hereto may terminate this Agreement at any time upon sixty days written notice,
without liability or expenses incurred or continuing obligation, except as
otherwise set forth herein. Neither termination of this Agreement nor completion
of the assignment contemplated hereby shall affect: (i) any compensation earned
by STAR or any other finder up to the date of termination or completion, as the
case may be, (ii) any compensation to be earned by STAR or any other finder
after termination pursuant to paragraph 3 hereof, (iii) the reimbursement of
expenses incurred by STAR or any other finder up to the date of termination or
completion, as the case may be, (iv) the provisions of Sections 3 through 11,
inclusive, of this Agreement, and (v) the attached Indemnification Provisions
which are incorporated herein, all of which shall remain operative and in full
force and effect.
7. The validity and interpretation of this Agreement shall be governed by the
law of the State of New York applicable to agreements made and to be fully
performed therein, without reference to conflicts of laws. The Company and STAR
irrevocably submit to the jurisdiction of any court of the State of New York
located in New York City, new York for the purpose of any suit, action, or other
proceeding arising out of this Agreement, or any of the agreements or
transactions contemplated hereby, which is brought by or against the Company,
and (i) hereby irrevocably agrees that all claims in respect of any such suit,
action, or proceeding may be heard and determined in any such court and (ii) to
the extent that the Company has acquired, or hereafter may acquire any immunity
from jurisdiction of such court or from any legal process therein, the Company
hereby waives, to the fullest extent permitted by law, such immunity. The
Company hereby waives, and agrees not to assert in any such suit, action, or
proceeding, in each case, to the fullest extent permitted by applicable law, any
claim that (a) the Company is not personally subject to the jurisdiction of any
such court, (b) the Company is immune from any legal process (whether through
service or notice, attachment prior to judgment, attachment in aid of execution,
execution, or otherwise) with respect to the Company's property, or (c) any such
suit, action, or proceeding is brought in an inconvenient forum.
STAR ASSOCIATES, LLC
Titan Addendum March 15, 2003
Page 4
8. Each such counterpart shall be, and shall be deemed to be, an original
instrument, but all such counterparts taken together shall constitute one and
the same Agreement. This Agreement may not be modified or amended except in
writing signed by the parties hereto.
9. The Consultant may disclose any Confidential Information that is required to
be disclosed by law, government regulation, or court or administrative order or
process. If disclosure is required, the Consultant will give the Company advance
notice so that the Company may seek a protective order or take other action
reasonable under of the circumstances. The Company also understands the
Consultant must release all types of information in performance of the duties
for the Company and requests to be informed upon request for a list of which
confidential information has been dispersed.
10 Upon termination of this Agreement, the Consultant will promptly return to
the Company at the Company's cost and request or destroy all materials
containing Confidential Information, including, but not limited to, data,
records, reports, and other property furnished by the Company to the Consultant.
11 Each of the parties hereto represents and warrants that execution, delivery,
or performance of this Agreement does not conflict with, or violate the terms
of, any other agreement to which it is a party or by which it is bound.
12 Any notice provided under this Agreement shall be in writing and shall be
deemed to have been effectively given when delivered personally, sent by private
express mail service (such as Federal Express), or sent by registered or
certified mail (return receipt requested) to the address set forth herein (or to
such other address as any party has furnished in writing to the other parties).
13 The invalidity or unenforceability of any particular provision of this
Agreement or portion thereof shall not affect the validity or enforceability of
any other provision thereof or portion thereof. If any provision of this
Agreement is adjudicated to be so broad as to be unenforceable, it shall be
interpreted to be only as broad as is enforceable.
14 The benefits of this Agreement shall inure to the respective successors and
assigns of the parties hereto and of the indemnified parties hereunder and their
successors and assigns and representatives, and the obligations and liabilities
assumed in this Agreement by the parties hereto shall be binding upon their
respective successors and assigns.
15 For the convenience of the parties, any number of counterparts of this
Agreement may be executed by the parties hereto. Each such counterpart shall be,
and shall be deemed to be, an original instrument, but all of such counterparts
taken together shall constitute one and the same Agreement. This Agreement may
not be modified or amended, except in writing signed by the parties hereto.
16 This Addendum shall not detract or lessen or otherwise affect any previous
Agreement between STAR and the Company or its subsidiaries or predecessors
unless specifically mentioned herein. This addendum is meant to add to the terms
and duties of STAR's other Agreements with the Company as described herein.
If the foregoing correctly sets forth our Agreement, please sign the
enclosed copy of this letter in the space provided and return it to us.
Very truly yours,
STAR ASSOCIATES, LLC
By: /s/ Xxxxxx Xxxxxxx
Name: Xxxxxx Xxxxxxx
Title: Principal
STAR ASSOCIATES, LLC
Titan Addendum March 15, 2003
Page 5
Confirmed and Agreed to
this 15 day of March, 2003:
VENTURES-NATIONAL INCORPORATED
By: /s/ Xxxxx X. Xxxxx
----------------------------------------------
Name: Xxxxx X. Xxxxx
Title: President and Chief Executive Officer
INDEMNIFICATION PROVISIONS
The Company (as such term is defined in the Agreement or Addendum
[hereafter refered to as the "Agreement"] (as such term is defined below))
agrees to indemnify and hold harmless STAR against any and all losses, claims,
damages, obligations, penalties, judgments, awards, liabilities, costs,
expenses, and disbursements (and all actions, suits, proceedings, and
investigations in respect thereof and any and all legal or other costs,
expenses, and disbursements in giving testimony or furnishing documents in
response to a subpoena or otherwise), including, without limitation, the costs,
expenses, and disbursements, as and when incurred, of investigating, preparing,
or defending any such action, proceeding, or investigation (whether or not in
connection with litigation in which STAR is a party), directly or indirectly,
caused by, relating to, based upon, arising out of, or in connection with (a)
STAR's acting for the Company, including, without limitation, any act or
omission by STAR in connection with its acceptance of or the performance or
non-performance of its obligations under this agreement, dated March 15, 2003
between STAR and the Company, as such agreement may be amended from time to time
(the "Agreement"), or (b) any Transaction (as such term is defined in the
Agreement); provided, however, such indemnity shall not apply to any portion of
any such loss, claim, damage, obligation, penalty, judgment, award, liability,
cost, expense, or disbursement to the extent it is found in a final judgment by
a court of competent jurisdiction (not subject to further appeal) to have
resulted primarily and directly from the gross negligence or willful misconduct
of STAR. The Company also agrees that STAR shall not have any liability (whether
direct or indirect in contract or tort or otherwise) to the Company for or in
connection with the engagement of STAR, except to the extent that any such
liability is found in a final judgment by a court of competent jurisdiction (not
to subject to further appeal) to have resulted primarily and directly from
STAR's gross negligence or willful misconduct.
These Indemnification Provisions shall be in addition to any liability
which the Company may otherwise have to STAR or the persons indemnified below in
this sentence and shall extend to the following: STAR, its affiliated entities,
directors, officers, employees, counsel, agents, and controlling persons (within
the meaning of the federal securities laws). All references to STAR in these
Indemnification Provisions shall be deemed to include any and all of the
foregoing.
If any action, suit, proceeding, or investigation is commenced as to
which STAR proposed to demand indemnification, it shall notify the Company with
reasonable promptness; provided, however, that any failure by STAR to notify the
Company shall not relieve the Company from its obligations hereunder. STAR shall
have the right to retain counsel of its own choice to represent it, and the
Company shall pay the fees, expenses, and disbursements of such counsel; and
such counsel shall, to the extent consistent with its professional
responsibilities, cooperate with the Company and any counsel designated by the
Company. The Company shall be liable for any settlement of any claim against
STAR made with its written consent, which consent shall not be unreasonably
withheld. The Company shall not, without the prior written consent of STAR,
settle or compromise any claim, or permit a default or consent to the entry of
any judgment in respect thereof, unless such settlement, compromise, or consent
includes, as an unconditional term thereof, the giving by the claimant to STAR
of an unconditional release from all liability in respect of such claim.
In order to provide for just and equitable contribution, if a claim for
indemnification pursuant to these Indemnification Provisions is made, but it is
found in a final judgment by a court of competent jurisdiction (not subject to
further appeal) that such indemnification may not be enforced in such case, even
though the express provisions hereof provide for indemnification in such case,
then the Company, on the one hand, and STAR, on the other hand, shall contribute
to the losses, claims, damages, obligations, penalties, judgments, awards,
liabilities, costs, expenses, and disbursements to which the
indemnified persons may be subject in accordance with the relative benefits
received by the Company, on the one hand, and STAR, on the other hand, in
connection with the statements, acts, or omissions which resulted in such
losses, claims, damages, obligations, penalties, judgments, awards, liabilities,
costs, expenses, and disbursements and the relevant equitable considerations
shall also be considered. No person found liable for a fraudulent
misrepresentation shall be entitled to contribution from any person who is not
also found liable for such fraudulent misrepresentation. Notwithstanding the
foregoing, STAR shall not be obligated to contribute any amount hereunder that
exceeds the amount of fees previously received by STAR pursuant to the
Agreement.
Neither termination nor completion of the engagement of STAR referred
to above shall affect these Indemnification Provisions, which shall then remain
operative and in full force and effect.
