EXHIBIT 4.1
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FINANCIAL ADVISORY AND INVESTMENT BANKING AGREEMENT
This Agreement is made and entered into as of the ____ day of
________________, 1997 between Network 1 Financial Securities, Inc., a New
Jersey corporation (sometimes referred to as "Network 1" and sometimes referred
to as the "Consultant") and Xxxx Computer Corporation, a Delaware corporation
(the "Company").
In consideration of the mutual promises made herein and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. PURPOSE: The Company hereby engages Network 1 for the term specified
in Paragraph 2 hereof to render advice to the Company as an investment banker
relating to financial and similar matters upon the terms and conditions set
forth herein.
2. TERM: Except as otherwise specified in Paragraph 4 hereof, this
Agreement shall be effective from the Closing Date, as defined in the
Underwriting Agreement of even date between Network 1 and the Company, and for
twenty-four (24) months thereafter.
3. DUTIES OF NETWORK 1: During the term of this Agreement, Network 1
shall, upon the request of the Company, provide the Company with corporate
finance and related financial advisory services, advice with respect to
potential acquisitions and other business transactions and advice with respect
to stockholder relations matters. All obligations of the Consultant contained
herein shall be subject to the Consultant's availability to perform such
services and the amount of notice received from the Company.
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The Consultant shall devote such time and effort to the performance of its
duties hereunder as the Consultant shall determine is reasonably necessary. The
Consultant may look to such others for such factual information, investment
recommendations, economic advice and/or research, upon which to base its advice
to the Company hereunder, as it shall deem appropriate. The Company recognizes
that Network 1 now renders and may continue to render financial and other
advisory services to other individuals and entities which may or may not conduct
activities similar to those of the Company and acknowledges that Network 1 shall
be free to render such advice and to perform such services for these and other
individuals and entities.
4. COMPENSATION:
4.1 In consideration for the services rendered by Network 1 to the
Company pursuant to this Agreement (and in addition to the expenses provided for
in Paragraph 5 hereof), the Company shall pay Network 1 a non-refundable fee of
Sixty Thousand ($60,000.00) Dollars, payable in advance, upon the execution of
this Agreement. This fee represents a monthly fee of Two Thousand Five Hundred
($2,500.00) Dollars throughout the term of this Agreement. In addition, if any
Transaction (as defined below) occurs during the term of this Agreement or
within twelve months thereafter, the Company shall pay fees to Network 1 as
follows:
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CONSIDERATION FEE
First $1,000,000 5% of First $1,000,000
Second $1,000,000 4% of First $1,000,000
Third $1,000,000 3% of First $1,000,000
Fourth $1,000,000 2% of First $1,000,000
Consideration in excess 1% of Consideration in
of the fourth $1,000,000 excess of fourth $1,000,000
For purposes of this Agreement, a "Transaction" shall mean (i) any transaction
originated by Network 1, other than in the ordinary course of trade or business
of the Company, whereby, directly or indirectly, control of, or a material
interest in, the Company and its subsidiaries or the business or assets of the
Company and its subsidiaries, is transferred for Consideration, or (ii) any
transaction originated by Network 1 whereby the Company acquires any other
company, or the assets of any other company or an interest in any other company;
and "Consideration" shall mean the total market value on the day of the closing
of stock, cash, assets and all other property (real or personal) exchanged or
received, directly or indirectly by the Company or any of its security holders
in connection with any Transaction. Any co-broker retained by Network 1 shall
be paid by Network 1. All Transaction fees to be paid pursuant to this
Agreement, except as otherwise specified, are due and payable to Network 1 in
cash at the closing or closings of a Transaction. In the event that this
Agreement shall not be renewed or is terminated for any reason, notwithstanding
any such non-renewal or termination, Network 1 shall be entitled to the entire
fee provided in this Paragraph 4, for any Transaction for which the discussions
were initiated during the term of this
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Agreement and which is consummated within a period of twelve months after non-
renewal or termination of this Agreement. Nothing herein shall impose any
obligation on the part of the Company to enter into any Transaction.
4.2 In the event Network 1 originates a line of credit with a lender
or a corporate partner, the Company and Network 1 will mutually agree on a
satisfactory fee and the terms of payment of such fee. In the event Network 1
introduces the Company to a joint venture partner or customer and sales develop
as a result of the introduction, the Company agrees to pay a fee to Network 1 of
five (5%) percent of total sales generated directly from this introduction
during the first two years following the date of the first sale. Total sales
shall mean gross receipts less any applicable refunds, returns, allowances,
credits, taxes and shipping charges and monies paid by the Company by way of
settlement or judgment arising out of claims made by or threatened against the
Company. Commission payments shall be paid on the 15th day of each third month
following the receipt of customers' payments. In the event any adjustments are
made to the total sales after the commission has been paid, the Company shall be
entitled to an appropriate refund or credit against future payments under this
Agreement.
4.3 All fees to be paid pursuant to this Agreement, except as
otherwise specified, are due and payable to Network 1 in cash or company check
at the closing or closings of any Transaction specified in Paragraph 4. In the
event that this Agreement shall not be renewed or if terminated for any reason,
notwithstanding any such non-renewal or termination, Network 1 shall be entitled
to a
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full fee as provided under Paragraphs 4 and 5 hereof, for any Transaction for
which the discussions were initiated during the term of this Agreement and which
is consummated within a period of twelve months after non-renewal or termination
of this Agreement. Nothing herein shall impose any obligation on the part of
the Company to enter into any Transaction.
5. EXPENSES OF NETWORK 1: In addition to the fees payable hereunder and
regardless of whether any Transaction is proposed or consummated, the Company
shall reimburse Network 1 for the reasonable fees and disbursements of Network
1's counsel and Network 1's reasonable travel and out-of-pocket expenses
incurred in connection with the services performed by Network 1 pursuant to this
Agreement and at the request of the Company, including without limitation,
hotels, food and associated expenses and long-distance telephone calls.
6. LIABILITY OF NETWORK 1:
6.1 In furnishing the Company with advice and other services as
herein provided, neither Network 1 nor any officer, director or agent thereof
shall be liable to the Company or its creditors for any acts and/or omissions
attributable to or arising from such services, including, but not limited to,
errors of judgment in connection therewith, but not including intentional or
willful misconduct by the Consultant in the performance of such services.
6.2 It is further understood and agreed that Network 1 may rely upon
information furnished to it reasonably believed to be accurate and reliable and
that, except as herein provided, Network 1 shall not be accountable for any loss
suffered by the
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Company by reason of the Company's action or inaction on the basis of any
advice, recommendation or approval of Network 1, its partners, employees or
agents.
6.3 The Company acknowledges that all opinions and advice (written or
oral) given by Network 1 to the Company in connection with Network 1's
engagement are intended solely for the benefit and use of the Company in
considering the transaction to which they relate, and the Company agrees that no
person or entity other than the Company shall be entitled to make use of or rely
upon the advice of Network 1 to be given hereunder, and no such opinion or
advice shall be used for any other purpose or reproduced, disseminated, quoted
or referred to at any time, in any manner or for any purpose, nor may the
Company make any public references to Network 1, or use Network 1's name in any
annual reports or any other reports or releases of the Company without Network
1's prior written consent.
6.4 The Company acknowledges that Network 1 makes no commitment
whatsoever as to making a market in the Company's securities or to recommending
or advising its clients to purchase the Company's securities. Research reports
or corporate finance reports that may be prepared by Network 1 will, when and if
prepared, be done solely on the merits based upon an analysis performed by
Network 1 and its corporate finance personnel.
7. COMPANY INFORMATION:
7.1 The Company shall furnish to the Consultant all data, material
and other information relevant to the performance by the Consultant of its
obligations under this Agreement, or particular projects as to which the
Consultant is acting as
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advisor, which will permit the Consultant to know all facts material to the
advice to be rendered, and all material or information reasonably requested by
the Consultant. The Company acknowledges and agrees that in performing its
services under this engagement, Network 1 may rely upon the data, material and
other information supplied by the Company without independently verifying the
accuracy, completeness or veracity of same. In the event that the Company fails
or refuses to furnish any such data, material or information reasonably
requested by the Consultant, and thus prevents or impedes the Consultant's
performance hereunder, any inability of the Consultant to perform shall not be a
breach of its obligations hereunder.
7.2 Except as contemplated by the terms hereof or as required by
applicable law, Network 1 shall keep confidential all non-public information
provided to it by the Company and shall not disclose such information to any
third party without the Company's prior written consent, other than to such of
its employees and advisors as Network 1 determines in its sole judgment need to
have access thereto. Notwithstanding the foregoing, the Consultant shall not be
required to maintain confidentiality with respect to information (i) which is or
becomes part of the public domain; (ii) of which it had independent knowledge
prior to disclosure; (iii) which comes into the possession of the Consultant or
its employees or agents in the normal and routine course of its own business
from and through independent non-confidential sources; or (iv) which is required
to be disclosed by the Consultant pursuant to legal process or in accordance
with governmental or regulatory requirements. If the Consultant is requested or
required (by oral
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questions, interrogatories, requests for information or document subpoenas,
civil investigative demands, or similar process) to disclose any confidential
information supplied to it by the Company, or the existence of other
negotiations in the course of its dealings with the Company or its
representatives, the Consultant shall, unless prohibited by law, promptly notify
the Company of such request(s) so that the Company may seek an appropriate
protective order.
8. INDEMNIFICATION: The Company agrees to indemnify and hold harmless
the Consultant, its partners, employees, agents, representatives and controlling
persons (and the officers, directors, employees, agents, representatives and
controlling persons of each of them) from and against any and all losses,
claims, damages, liabilities, costs and expenses (and all actions, suits,
proceedings or claims in respect thereof) and any legal or other expenses in
giving testimony or furnishing documents in response to a subpoena or otherwise
(including, without limitation, the cost of investigating, preparing or
defending any such action, suit, proceeding or claim, whether or not in
connection with any action, suit, proceeding or claim in which the Consultant is
a party), as and when incurred, directly or indirectly, caused by, relating to,
based upon or arising out of the Consultant's service pursuant to this
Agreement. The Company further agrees that the Consultant shall incur no
liability to the Company or any other party on account of this Agreement or any
acts or omissions arising out of or related to the actions of the Consultant
relating to this Agreement or the performance or failure to perform any services
under this Agreement, except for the Consultant's intentional or
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willful misconduct. The obligations of the Company under the Section shall
survive the termination of this Agreement.
9. INDEPENDENT CONTRACTOR: Network 1 shall perform its services
hereunder as an independent contractor and not as an employee of the Company or
an affiliate thereof. It is expressly understood and agreed to by the parties
hereto that Network 1 shall have no authority to act for, represent or bind the
Company or any affiliate thereof in any manner, except as may be agreed to
expressly by the Company in writing from time to time.
10. MISCELLANEOUS:
10.1 This Agreement between the Company and Network 1 constitutes the
entire agreement and understanding of the parties hereto and supersedes any and
all previous agreements and understandings, whether oral or written, between the
parties with respect to the matters set forth herein.
10.2 Any notice or communication permitted or required hereunder shall
be in writing and shall be deemed sufficiently given if hand-delivered or sent
(i) postage prepaid by registered mail, return receipt requested, or (ii) by
facsimile to the respective parties as set forth below, or to such other address
as either party may notify the other in writing:
If to the Company to: Xxxx Computer Corporation
0000 Xxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Telecopier: (000)000-0000
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with a copy to: Xxxxxx X. Xxxxxx, Esquire
Xxxxxxx Savage Kaplowitz & Xxxxxx, LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 0000
Telecopier: (000)000-0000
If to Network 1, to: Network 1 Financial Securities, Inc.
One Financial Galleria
0 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxxxx 00000
Attn: Xxxxxxxx Xxxxxxx, Esquire
Telecopier: (000)000-0000
with a copy to: Xxxxxxx X. Xxxxxx, Esquire
Xxxxx & Xxxxx
X.X. Xxx 0000
Xxxxxxxxx, Xxx Xxxxxx 00000-0000
Telecopier: (000)000-0000
10.3 This Agreement shall be binding upon and inure to the benefit of
each of the parties hereto and their respective successors, legal
representatives and assigns.
10.4 This Agreement may be executed in any number of counterparts,
each of which together shall constitute one and the same original document.
10.5 No provision of this Agreement may be amended, modified or
waived, except in a writing signed by all of the parties hereto.
10.6 This Agreement shall be construed in accordance with and governed
by the laws of the State of New Jersey, without giving effect to conflict of law
principles. The parties hereby agree that any dispute which may arise between
them arising out of or in connection with this Agreement shall be adjudicated
before a court located in Monmouth County, New Jersey, and they hereby submit to
the exclusive jurisdiction of the courts of the State of New Jersey and of the
Federal District Court for the District of New Jersey with respect to any action
or legal proceeding commenced
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by any party, and they irrevocably waive any objection they now or hereafter may
have respecting the venue of any such action or proceeding brought in such a
court or respecting the fact that such court is an inconvenient forum, relating
to or arising out of this Agreement, and consent to the service of process in
any such action or legal proceeding by means of registered or certified mail,
return receipt requested, in care of the address set forth in Section 10.2
hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
NETWORK 1 FINANCIAL SECURITIES, INC.
By:
-----------------------------------
Name:
Title:
XXXX COMPUTER CORPORATION
By:
-----------------------------------
Name:
Title:
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