EXHIBIT 10.1
FINANCIAL ADVISORY AND
INVESTMENT ADVISING AGREEMENT
This Agreement is made and entered into as this ____ day of __________,
1999 by and between Crown Capital Advisors, Inc. ("the Investment Adviser") and
iNet Technology Group Incorporated ("the Company"), for the purpose of defining
and acknowledging the terms of this Agreement.
In consideration of the mutual promises made herein and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. EXCLUSIVITY. The Company hereby engages the Investment Adviser on an
non-exclusive basis for the term specified in Paragraph Two (2) hereof
to render services to the Company as its corporate finance consultant,
financial adviser and investment adviser upon the terms and conditions
set forth herein.
2. TERM. This Agreement shall be effective for a period of one year,
commencing upon the date this contract is executed by both parties and
may be extended as the parties shall mutually agree in writing, subject
to the establishment of arrangements for additional compensation and
other appropriate terms for such extension.
3. SERVICES TO BE PROVIDED. During the term of this Agreement, the
Investment Adviser shall provide the Company with such regular and
customary consulting advice as is reasonably requested by the Company,
provided that the Investment Adviser shall not be requested to
undertake duties not reasonably within the scope of the financial
advisory or investment advising services contemplated by this
agreement. It is understood and acknowledged by the parties that the
value of Investment Adviser's advice is not readily quantifiable, and
that Investment Adviser shall be obligated to render advice upon the
request of the Company, in good faith, and shall use its best efforts
to perform the contemplated duties as set forth herein. Investment
Adviser's duties may include, but will not necessarily be limited to,
providing recommendations and assisting in the following:
1. disseminating information about the Company to the investment
community at large;
2. rendering advice and assistance in connection with the
preparation of annual and interim reports and press releases;
3. assisting in the company's financial public relations;
4. arranging, on behalf of the Company, at appropriate times,
meetings with securities
Page 1
analysts of investment banking firms;
5. rendering advice with regard to internal operations,
including, but not limited to:
1. the formation of corporate goals and their
implementation;
2. the Company's financial structure and its divisions
or subsidiaries;
3. securing, when and if necessary and possible,
additional financing through banks, insurance
companies or other institutions; and
4. corporate organization and personnel;
6. rendering advice with regard to any of the following corporate
finance matters:
1. changes in the capitalization of the Company;
2. changes in the corporate structure;
3. redistribution of shareholdings of the Company's
stock;
4. sales of securities in public or private transactions
and the structuring thereof;
5. alternative uses of corporate assets; and
6. structure and use of debt;
7. rendering advice or assistance with regard to any of the
following merger or acquisition activities:
1. the acquisition and/or merger of or with other
companies;
2. divestiture or any other similar transaction; and
3. the sale of the Company itself (or any significant
percentage, assets, subsidiaries or affiliates
thereof);
8. rendering advice and/or assistance with regard to bank
financing or any other financing from financial institutions
or individuals (including but not limited to revolving credit
facilities, lines of credits, term loans, rediscounted credit
facilities, senior and junior loans, whether collateralized or
unsecured, etc.);
Page 2
9. act as an information agent in connection with any tender
offers or share exchange offers;
10. it is understood by both parties that Investment Adviser will
not act as an underwriter or placement agent for the Company's
securities.
4. UNDERTAKINGS OF THE COMPANY. In order to facilitate financing, the
Company shall afford to the Investment Adviser and its representatives
full and complete access to all of its properties and records and the
full cooperation of management in the prompt preparation of a
confidential placement memorandum containing all of the information the
Investment Adviser may deem necessary to effect the successful
placement of the transaction.
5. COMPENSATION. In consideration for the services rendered by Investment
Adviser to the Company pursuant to this agreement (and in addition to
the expenses provided for in Paragraph Seven hereof), the Company shall
compensate the Investment Adviser as follows:
1. INITIAL RETAINER. None.
2. INITIAL WARRANTS. At closing of the first transaction, credit
facility or equity financing transaction, as contemplated
herein, the Company shall issue to the Investment Adviser
and/or its designees Warrants to purchase two and one-half
percent (2 1/2%) of the Company's fully diluted common stock
at a nominal purchase price, and an additional two and
one-half percent (2 1/2%) of the Company's fully diluted
common stock at a purchase price of $1.00 per share (the
"Warrant Option"). All Warrants shall expire five (5) years
from the date of issuance and shall have "piggy back" and
demand registration rights.
1. CASHLESS EXERCISE . In lieu of paying the shares
purchase price in cash, the Investment Adviser may,
at its option, deliver to the Company for
cancellation shares of common stock or other
outstanding securities of the Company convertible
into the Company's common stock (including rights
represented by this Warrant) that have a value equal
to the shares purchase price. The determination of
value shall be made by agreement between the Holder
and the Company, but, failing such agreement, by
reference to the trading price of the Company's
common stock on the date of exercise.
2. The Investment Adviser shall be restricted from
liquidiating the Warrants and/or securities acquired
from the exercise of said warrants. The Investment
Adviser shall not sell within a period of three
months more than the greater of (i) one percent of
the share of other units of the class outstanding or
(ii) the average weekly reported volume of trading
for the Company during the four
Page 3
calendar weeks prior to the sale of the securities or
(iii) the average weekly volume of trading in such
securities reported through the consolidated
transaction reporting system contemplated by Rule
11A(a)3-1 under the Securities Exchange Act of 1934
during the four week period specified in the
subdivision (ii) of this paragraph.
3. The figures in the initial paragraph labeled Initial
Warrants above shall be calculated based on a $25
million transaction figure. If the transaction is
less than $25 million, the Warrants issued shall be
prorated for the amount raised.
3. MERGER AND ACQUISITION FEE. If any transaction (as hereinafter
defined) is consummated during the Term of this Agreement with
any parties, introduced or contacted by the Investment Adviser
during the term of this agreement, the Company shall pay at
the closing of each such transaction a cash fee equal to the
sum of:
1. Five percent (5%) of the first fifteen million
dollars ($15,000,000) of the aggregate consideration
(as herein defined) of a transaction;
2. Four percent (4%) of the next ten million dollars
($10,000,000) of the aggregate consideration of a
transaction;
3. Three percent (3%) of the next ten million dollars
($10,000,000) of the aggregate consideration of a
transaction;
4. Two percent (2%) of the aggregate consideration over
thirty five million dollars ($35,000,000); and
5. In no event shall the fee provided for above within
this subparagraph be less than $25,000.
4. AGGREGATE CONSIDERATION is defined and computed as follows:
1. The total sale proceeds and other consideration
received (which shall be deemed to include amounts
paid into escrow) by the Company and/or its
shareholders or by a target and/or its shareholders
upon the consummation of the transaction (including
payments made in installments), inclusive of cash,
securities, notes, consulting agreements and
agreements not to compete, plus the total value of
liabilities assumed.
2. If a portion of such consideration includes
contingency payments (whether or not related to
future earnings or operations), aggregate
consideration will include 75% of the face value of
such payment without regard to whether the
Page 4
conditions for the payment of such contingent amounts
have been or may be satisfied.
3. If the aggregate consideration for the transaction
consists in whole or in part of securities, for the
purposes of calculating the amount of aggregate
consideration, the value of such securities will be
the value thereof on the day preceding the
consummation of the transaction as the company and
investment adviser agree; provided, in the case of
securities for which there is a public trading
market, however, the value will be determined by the
average last sales price for such securities for the
last twenty (20) days prior to such consummation as
determined by Investment Adviser and communicated by
Investment Adviser to the Company. If there is no
public trading market for such securities but
securities have been sold in a private placement
within the past twenty-four (24) months, the fair
market value shall be based upon the gross sales
price in the last such private placement. For other
property received or receivable as a part of the
aggregate consideration and the parties are unable to
agree, then each of Investment Adviser and the
Company will select an investment banking firm
respected in the merger and acquisition field to
determine a value and the midpoint between the two
values established by the two independent experts
will be the fair market value for the purpose hereof.
4. For purposes of this agreement, any of the following
transactions shall constitute a "transaction":
(1) the sale, outside of the ordinary course of
business, of the Company or any of its
assets, securities, or business by means of
a merger, consolidation, joint venture,
exchange offer or purchase or sale of stock
or assets, or any transaction resulting in
any change of control of the Company or its
assets or business; or
(2) the purchase by the Company, outside of the
ordinary course of business, or another
company or any of its assets, securities or
business by means of a merger,
consolidation, joint venture, exchange
offer, tender offer or purchase or sale of
stock or assets.
(3) Notwithstanding the above, the proposed
initial transaction involving the public
offering of the Company's Securities as
described by the Form S-4 filed by Xxxxxxx &
Xxxxxx, P.A., shall be aggregated as a
single transaction.
5. THIRD-PARTY DEBT PLACEMENTS. In the event Investment Adviser
provides introduction
Page 5
to a lender originating a debt facility, inclusive of
revolving credit facilities, lines of credits, term loans,
rediscounted credit facilities, senior and junior loans,
whether collateralized or unsecured, etc., (the "credit
facility") with a bank or other institutional lender (the
"lending source"), the Company will pay Investment Adviser a
fee of two percent (2%) of the maximum amount of the Credit
Facility. In the event Investment Adviser is involved in
arranging an increase in a Credit Facility, the Company will
pay Investment Adviser a fee of two percent (2%) of the
increase from the maximum amount of the existing Credit
Facility to the maximum amount of the new Credit Facility. In
no event, however, shall the fee provided for within this
subparagraph be less than $25,000.
6. STRATEGIC ALLIANCES AND PARTNERSHIPS. In the event Investment
Adviser 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 of two percent (2%) of total
sales generated directly from this introduction during the
first five (5) years following the date of the first sale.
Total sales shall mean cash receipts less any applicable
refunds, returns, allowances, credits and shipping charges and
monies paid by the Company by way of settlement or judgment
arising out of claims made or threatened against the Company.
Commission payments shall be paid on the 15th day of each
month following the receipt of customers' payment. 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 due under
this Agreement.
7. FAIRNESS OPINIONS, VALUATIONS AND OTHER SERVICES. Fees and
expenses payable to Investment Adviser with regard to fairness
opinions, valuations, and services not specifically set forth
herein will be determined by mutual agreement in writing at
such time as the nature and terms of such transactions are
determined.
6. PAYMENT OF FEES. All fees to be paid pursuant to this Agreement are due
and payable to the Investment Adviser in cash at the closing or
closings of any transaction as specified in Paragraph Three hereof. The
Company hereby irrevocably authorizes and instructs third party funding
sources, including Lending Sources and private equity groups, (the
"Funding Sources"), to pay directly to Investment Adviser cash sums
provided for in Paragraph Five above and further authorizes Investment
Adviser to notify the Funding Sources of this provision and the terms
of this agreement for purposes of this provision and payment of the
sums due under Paragraph Five of this Agreement. The Company agrees
that Investment Adviser is a direct beneficiary of any eventual
financing agreement between the Company and the Funding Sources. The
Company hereby expressly agrees that in the event any dispute or
disagreement arises with respect to the payment to Investment Adviser
under this agreement, that the Financing Sources shall immediately
place all disputed sums in an interest bearing Escrow account pending
resolution of the dispute. The Company hereby irrevocably authorizes
and instructs the Funding Sources to escrow such disputed sums. The
Company
Page 6
further agrees that any sums due under this agreement which are not in
dispute shall not be escrowed, but shall be paid upon closing to
Investment Adviser by the Funding Sources as provided for under the
terms of this Agreement.
7. CONTINUING OBLIGATION. In the event that this agreement shall not be
renewed or if terminated for any reason notwithstanding any such
renewal or termination, Investment Adviser shall be entitled to a full
fee as provided under Paragraph Five 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 (12) months after
non-renewal or termination of this agreement.
8. EXPENSE REIMBURSEMENT. In addition to the compensation payable
hereunder, and regardless whether any transaction set forth in
Paragraph Three or Five hereof is proposed or consummated, the Company
shall reimburse Investment Adviser for all fees and disbursements of
Investment Adviser's counsel, travel and out of pocket expenses
incurred in connection with the services performed by Investment
Adviser pursuant to this Agreement, including without limitation,
hotel, food and associated expenses, telephone calls and legal
expenses. Any travel, accommodations or consultant fees in excess of
$2,000 shall be approved in advance by the Company.
9. CONFIDENTIALITY. The Company acknowledges that all opinions and advice
(written or oral) given by the Investment Adviser to the Company in
connection with Investment Adviser'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 the Investment Adviser 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
Investment Adviser, or use Investment Adviser's name in any annual
reports or any other reports or releases of the Company without
Investment Adviser's prior written consent.
10. INDEPENDENT CONTRACTOR. The Company acknowledges that the Investment
Adviser is in the business of providing financial services and
consulting advice to others. Nothing herein contained shall be
construed to limit or restrict Investment Adviser in conducting such
business with respect to others, or in rendering such advice to others.
Investment Adviser 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 the Investment Adviser 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.
11. RELIANCE. The Company recognizes and confirms that, in advising the
Company and in fulfilling its engagement hereunder, the Investment
Adviser will use and rely on data, material
Page 7
and other information furnished to Investment Adviser by the Company.
The Company acknowledges and agrees that in performing its services
under this engagement, Investment Adviser may rely upon the data,
material and other information supplied by the Company without
independently verifying the accuracy, completeness or veracity of same.
12. NOTICES. 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, or (ii)
by facsimile, to the respective parties as set forth below, or to such
other address as either party may notify the other of in writing:
--------------------------------------------------------------------------------
Xxxxxxx Xxx, President Crown Capital Advisors, Inc.
iNet Technology Group Incorporated Admiralty Tower Two
000 Xxxxx Xxxxx Xxxx 0000 XXX Xxxxxxxxx
Xxxx Xxxxxx Xxxxx, XX 00000 Suite 307
(000) 000-0000 Xxxx Xxxxx Xxxxxxx, XX 00000
(000) 000-0000 (fax)
--------------------------------------------------------------------------------
13. INDEMNIFICATION. Investment Adviser and the Company have entered into a
separate letter agreement dated the date hereof ("the indemnity
letter") proving for the indemnification of Investment Adviser by the
Company in connection with Investment Adviser's engagement hereunder.
14. COUNTERPARTS. This agreement may be executed in any number of
counterparts, each of which together shall constitute one and the same
original document.
15. ASSIGNABILITY AND MODIFICATION. This agreement is not assignable and
cannot be modified or changed, nor can any of its provisions be waived,
except by the mutual agreement in writing of all parties.
16. GOVERNING LAW. This agreement shall be governed by the laws of the
State of Florida.
17. SEVERABILITY. Each paragraph, term or provision of this agreement shall
be considered severable and if, for any reason, any paragraph, term or
provision is determined to be invalid or contrary to any existing or
future law or regulation, such will not impair the operation, or effect
the remaining portions, of this agreement.
18. DISPUTE RESOLUTION. The parties shall attempt amicably to resolve
disagreements by negotiating with each other. In the event that the
matter is not amicably resolved through negotiation, any controversy,
dispute or disagreement arising out of or relating to this agreement (a
"controversy") shall be submitted to a nationally recognized
arbitration association, such as the American Arbitration Association,
for final binding arbitration, which
Page 8
shall be conducted by a single arbitrator (the "arbitrator") in Xxxx
Xxxx Xxxxx, Xxxxxxx, pursuant to the American Arbitration Association
Rules ("the rules"). Notwithstanding anything to the contrary contained
in the Rules, the Arbitrator shall not award consequential, exemplary,
incidental, punitive or special damages.
If any part shall desire relief of any nature whatsoever from any other
party as a result of any Controversy, such party will initiate such
arbitration proceedings within a reasonable time, but in no event more
than one (1) year after the facts underlying said Controversy first
arise or become known to the party seeking relief (whichever is later).
The failure of such party to institute such proceedings within said
period shall be deemed a full waiver of any claim for such relief.
Arbitrator may award the prevailing party its costs for the arbitration
proceeding; including its reasonable attorneys' fees and costs. The
parties agree that the decision and award of the Arbitrator shall be
taken, but that such award or decision may be entered as a judgement
and enforced in any court having jurisdiction over the party against
whom enforcement is sought. Any equitable relief awarded under this
paragraph shall be dissolved upon issuance of the Arbitrator's decision
and order.
Notwithstanding the provisions for dispute resolution, in the event of
a breach or threatened breach by any party to this agreement, either
party shall be entitled in order to maintain the status quo and pending
the outcome of any arbitration pursuant to this agreement, seek an
injunction or similar equitable relief restraining either party, as the
case may be, from committing or continuing any such breach or
threatened breach or granting specific performance of any act required
to be performed without the necessity of showing that money damages
would not afford an adequate remedy and without the necessity of
posting any bond or other security. The parties hereto hereby consent
to the jurisdiction of the Federal district courts for the Southern
District of Florida, and the Florida state courts located in 15th
Circuit Court for any proceedings under this paragraph. The parties
agree that the availability of arbitration in the agreement shall not
be used by any party as grounds for the dismissal of an injunctive
action instituted by the other party.
Agreed to and accepted by:
________________________________________ ________________________________
For iNet Technology Group Incorporated For Crown Capital Advisers, Inc.
________/__________/__________ ________/__________/____________
Date Date
Page 9
