These provisions are a part of and are incorporated into those certain Broker Dealer Master Agreements (each, the “BDMA”) that reference these provisions. Capitalized terms used herein without definition shall have the meanings ascribed to them in the BDMA. Broker Dealer reserves the right to amend these provisions without notice to the extent permitted by applicable law.
1. Independent Contractor Relationship.
(a) Representative shall perform the Services and other obligations under this Agreement as an independent contractor of Broker Dealer. Without the express written consent of Broker Dealer (which shall not be withheld, conditioned or delayed), Representative is prohibited from acting as a registered general securities representative of any other registered broker dealer for the purposes of providing Services or receiving compliance or support services. Nothing contained herein shall be construed to create or establish the relationship of employer and employee, agent, joint venturer, or partner between the Parties. Neither Party is authorized to make any representation, contract, or commitment on behalf of the other Party without prior written permission from such other Party.
(b) Representative shall not be entitled to any benefits offered by Broker Dealer to its employees, including, without limitation, workers’ compensation, medical insurance, disability insurance, vacation pay, or sick pay. Representative shall not be entitled to any other benefits or remuneration except as expressly set forth herein.
(c) Representative is responsible for all costs and expenses not listed herein, including costs of Representative’s legal counsel, travel, materials and additional costs of doing business.
(d) Representative recognizes that registered representative status can only be offered to an individual and not a corporate entity. Representative will therefore be issued a 1099 tax form naming the Representative as an individual, not as a corporate entity, for compensation received hereunder.
(e) Representative may enter into agreements related to Representative’s Outside Business Activities and FINRA rule 3280 (“Private Securities Transaction”), subject to Representative’s compliance with the terms hereof and applicable FINRA regulations.
2. Non-Solicitation. Lead Representative(s) shall not, during the Term and for a period of two years immediately following the termination of this Agreement for any reason (as if the termination of this Agreement had not occurred), whether with or without cause, either directly or indirectly, solicit, induce, recruit or encourage any of Broker Dealer’s affiliates, directors, employees, agents, customers, clients, registered representatives (excluding Secondary Representative(s) under this Agreement that became a registered representative of Broker Dealer for the purpose of supporting Lead Representative(s) while performing the Services) or consultants to terminate their relationship with Broker Dealer, either for Representative or for any other person or entity. Further, during the Term of this Agreement and at any time following the termination for any reason, whether with or without cause, Representative shall not use any Confidential Information (as defined below) of Broker Dealer to influence any of Broker Dealer’s clients or customers not to work with Broker Dealer or not purchase products or services from Broker Dealer.
(a) Representative and Broker Dealer will maintain in confidence and will not, directly or indirectly, disclose, share or use, both during the Term and for a period of two years after the Term, any proprietary information, Confidential Information, or know-how belonging to the other party, whether or not it is in written or permanent form, except to the extent necessary to perform the Services during the Term.
(b) “Confidential Information” shall include, but not be limited to, (i) this Agreement and the BDMA Provisions; (ii) all agreements and contracts in which Broker Dealer or Representative is a party, including, without limitation, those in the form of an agreement and all content and terms therein; and the names of parties to any agreement with Broker Dealer or Representative; (iii) the Services; (iv) pricing, commission, or other related compensation agreements with such parties; (v) Broker Dealer’s and Representative’s documents, business plans and strategies, including, without limitation, any and all documents and templates located at or through https://my.finalis.com (except only to the extent used in connection with a transaction through Representative’s affiliation with Broker Dealer); (vi) any and all data, information, documents, proprietary technology and know-how located at or through or in connection with the Services or the service technology provided by Broker Dealer to include the Mandate Marketplace™; and (vii) any other information regarding Broker Dealer or Representative or its respective business plans, documents, proprietary information and technology and practices.
(c) Notwithstanding the foregoing, Representative and Broker Dealer shall not be subject to the restrictions on disclosure set forth herein where:
(i) the Confidential Information is now or becomes public through no action of Representative or Broker Dealer in violation of this Agreement or any other contractual obligation of such party;
(ii) Representative or Broker Dealer already had the Confidential Information in their possession from their own work prior to the execution of this Agreement;
(iii) Representative or Broker Dealer received the Confidential Information from a third party on a non-confidential basis with no knowledge that the third-party was in breach of any obligations in relation to such disclosure;
(iv) Representative or Broker Dealer receives permission in writing from the Broker Dealer or Representative to disclose the Confidential Information; or
(v) the disclosure of the Confidential Information is required by law, FINRA rules or court order.
4. Non-Circumvention. During the term of this Agreement and for a period of 12 months thereafter, neither Representative nor its affiliates shall use information, contacts or introductions garnered through Broker Dealer, other representatives, persons or prospective clients or users engaged by or affiliated or in a contractual agreement with Broker Dealer and/or through technology services provided by Broker Dealer to include the Mandate Marketplace™ (the “Mandate Marketplace™”) to conduct discussions, provide financial advisory or investment banking services or consummate a transaction unless conducted in conjunction with Broker Dealer, such representative(s), person(s), client(s) or user(s) and/or consummated through the Mandate Marketplace™.
Unless there is a written agreement to which Representative and Broker Dealer are parties, Representative agrees that, during the term of this Agreement and for a period of 12 months thereafter, neither Representative nor its affiliates shall initiate or conduct discussions with, provide financial advisory or investment banking services to or consummate a transaction with a company sourced through the Mandate Marketplace™. Representative acknowledges and agrees that any letter or engagement agreements entered into by Representative that contravene this Section are null and void.
During the term of this Agreement and for a period of 12 months thereafter, in the event Representative or its affiliates receives any inquiry regarding a transaction sourced through the Mandate Marketplace™ from any party not already sourced through the Mandate Marketplace™, unless there is a written agreement with such party to which Representative and Broker Dealer are parties, Representative shall promptly inform (i) the other representatives affiliated with Broker Dealer involved in such transaction and (ii) Broker Dealer of such inquiry so that any other representatives affiliated with Broker Dealer involved in such transaction may assist in evaluating such party and its interest in such transaction and in any resulting negotiations. Representative shall not circumvent, avoid, bypass or obviate Broker Dealer and, if applicable, other representatives affiliated with Broker Dealer, directly or indirectly, to avoid payment of fees, commissions or any other form of compensation to Broker Dealer or such representative due in connection with this Agreement, the Mandate Marketplace™ or any other agreement.
5. Indemnification of Broker Dealer. Representative shall indemnify and hold harmless Broker Dealer and its officers, directors, agents, employees and controlling persons (collectively, the “Broker Dealer Indemnified Persons” and each a “Broker Dealer Indemnified Person”) from and against all liabilities, claims, causes of action, penalties, interest, and reasonable and documented expenses, including reasonable and documented fees and expenses of legal counsel (collectively, “Losses”), which a Broker Dealer Indemnified Person may incur that result from: (i) performance of, or failure to perform, the Services by Representative; (ii) any penalty or enforcement action taken by a regulatory authority against any Broker Dealer Indemnified Person in connection with Representative, the Services or this Agreement; (iii) the breach of any of Representative’s obligations of this Agreement or any failure of Representative to perform any of Representative’s obligations in this Agreement; (iv) actions or inactions or performance or failure to perform services in connection with any engagement letter, consulting agreement, contract or any other document or agreement that results in any Losses against a Broker Dealer Indemnified Person to include any Losses initiated or pursued by or resulting from a client of Representative or (v) in connection with any claim or potential claim by or against a Representative or a Representative’s current or previous employers, associates, partners and other affiliates (“Representative Affiliate”), including, without limitation, claims by a Representative or Representative Affiliate, a current or former client, broker dealer or employer (in whatever capacity) of a Representative or Representative Affiliate, or a governmental or self-regulatory agency arising out of or such current or former client’s, broker dealer’s or employer’s or a Representative’s or Representative Affiliate’s activities to include prior to the date hereof; provided, however, that the Broker Dealer will not be liable to indemnify an Indemnified Person pursuant to this paragraph to the extent that an arbitrator (or panel of arbitrators) or a court of competent jurisdiction will have determined by a final non-appealable judgment that such claim resulted from the gross negligence or willful misconduct of such Indemnified Person.
6. Indemnification of Representative. Broker Dealer shall indemnify and hold harmless Representative (collectively, the “Representative Indemnified Persons” and each a “Representative Indemnified Person”) from and against all Losses that a Representative Indemnified Person may incur or suffer under any U.S. federal or state securities laws that result from: (i) Broker Dealer’s performance of, or grossly negligent or willful failure to perform, the obligations of Broker Dealer under this Agreement; (ii) any penalty or enforcement action taken by a regulatory authority against any Representative Indemnified Person in connection with such obligations; or (iii) the material breach, due to gross negligence or willful misconduct of Broker Dealer, of any of Broker Dealer’s representations and warranties in this Agreement; provided, however, that Broker Dealer shall not be liable under this paragraph if the indemnification the Representative Indemnified Person seeks resulted from gross negligence or fraud of a Representative Indemnified Person or failure of Representative to perform any of Representative’s obligations in this Agreement. In no event will the aggregate amount to be contributed by Broker Dealer towards all Losses incurred by Representative exceed the actual fees received by Broker Dealer pursuant to the Agreement in the preceding 3 months of the date of a claim.
7. Legal Services. Although some of the owners and employees of Broker Dealer are attorneys, Broker Dealer does not provide legal services
8. Force Majeure. In the event that Broker Dealer is unable to perform any of its obligations under this Agreement due to natural disaster, war, acts of terror or aggression, actions or decrees of governmental bodies or communication line failure, which are not the fault of Broker Dealer (hereinafter referred to as a “Force Majeure Event”), Broker Dealer shall promptly give notice to the other party and shall do everything reasonably possible to resume performance and minimize any adverse impact; provided, further, that the foregoing shall not Broker Dealer‘s obligation to implement its disaster recovery plan and backup procedures. Upon receipt of such notice, the obligations under this Agreement shall be immediately suspended.
9. General Provisions.
(a) Entire Agreement; Severability. This Agreement, together with the BDMA Provisions and all annexes and schedules, and any other agreements incorporated by reference in such annexes and schedules, represents the entire agreement between the Parties and supersedes all prior and contemporaneous agreements, communications and representations between the Parties, either oral or in writing, relating to the subject matter herein. If the final judgment of any court or arbitrator of competent jurisdiction determines that any part of this Agreement is unenforceable or invalid, the remainder of this Agreement will continue to be valid and enforceable. There shall be no construction of any provision against Broker Dealer because this Agreement was drafted by Broker Dealer.
(b) Amendments. Broker Dealer reserves the right to amend this Agreement to include its fees hereunder from time to time. Broker Dealer shall send written notice by email to Representative of such amendments. No amendment or termination of this Agreement shall relieve Service Recipient of its obligation under the Agreement to pay Service Provider their Membership Fees and Minimum Security, as applicable, for the remainder of the term of the Agreement. If such amendment has a material adverse effect on any Representative, a Lead Representative shall be entitled to terminate this Agreement by written notice to Broker Dealer within 30 calendar days after the date of Representative’s receipt of notice of such amendment. If this Agreement is not so terminated by a Lead Representative within such time, such Lead Representative(s) shall be deemed to have accepted the amendment.
(c) Governing Law; Jurisdiction; Waiver of Jury Trial. This Agreement will be controlled by and construed under the laws of the State of New York without giving effect to any principles of conflicts of law. Each party hereby irrevocably consents and agrees that any proceeding between the parties arising out of or related to this Agreement shall be brought and maintained in any federal or state court of competent jurisdiction sitting in New York, New York. Each party irrevocably waives any right to trial by jury in any proceeding related to or arising out of this Agreement.
(d) Arbitration. Any dispute, claim or controversy arising out of or relating to this Agreement that cannot be resolved directly between the Parties will be determined, upon the demand of either Party, by binding arbitration in San Francisco, California, before a sole arbitrator with appropriate experience in securities, mergers and acquisitions, and investment banking. Such arbitration will be administered by FINRA. The Parties shall be entitled to conduct discovery as provided in Sections 1283.05 and 1283.1 of the California Code of Civil Procedure. The decision of the arbitrator shall be final and binding. Judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof.
(e) Attorneys’ Fees. If any dispute between the Parties results in arbitration, the prevailing Party shall be entitled to all reasonable costs in connection with the arbitration and the enforcement of any award rendered by the arbitrator, including, but not limited to, reasonable attorneys’ fees.
(f) Transfer. This Agreement, and any rights granted herein or therein, are personal to Parties and shall not be assigned, delegated, sublicensed, subcontracted, encumbered, or otherwise transferred; provided, however, that Broker Dealer may assign all Broker Dealer’s rights and obligations under this Agreement to any corporation or other business entity that succeeds to all or substantially all of Broker Dealer’s business through merger, consolidation, corporate reorganization or by acquisition of all or substantially all of Broker Dealer’s assets.
(g) Non-disparagement. Representative expressly agrees that it will not in any way disparage Broker Dealer, which shall include, but not be limited to, writing disparaging remarks or making disparaging statements, about Broker Dealer to any party. This clause shall survive the termination, expiration or completion of Broker Dealer’s engagement under the BDMA.
(h) Electronic Signature. Each party agrees that this Agreement and any other documents to be delivered in connection herewith may be electronically signed, and that any electronic signatures appearing on this Agreement or such other documents are the same as handwritten signatures for the purposes of validity, enforceability, and admissibility.
Last updated: February 1, 2023