EXHIBIT 10.1
XXXXXXX SECURITIES, LLC
0000 XXX XXXXXXX, XXXXX 0000
XXXXXXXXX XXXXXXX, XXXXXXXX 00000-0000
(000) 000-0000
(000) 000-0000 FAX
June 15, 2006
Mr. Xxxxx Xxxxxxx, President
Xxxxx.xxx, Inc.
000X Xxxxxxxxx Xxxxxxxxx, Xxxxx 00
Xxxx Xxxxx, Xxxxxxx, 00000
Re: Financial Advisory Agreement
Dear Xx. Xxxxxxx:
This letter will confirm our agreement ("Agreement") that Xxxxxxx Securities,
LLC ("Xxxxxxx") is authorized to represent Xxxxx.xxx, Inc. and its affiliates,
subsidiaries and related entities (collectively, the "Company") and to assist
the Company as its financial advisor on the terms and conditions set forth
herein. This Agreement shall become effective upon the execution hereof by both
Xxxxxxx and the Company.
1. PERFORMANCE OF SERVICES. In its capacity as financial advisor, Xxxxxxx
will assist the Company by undertaking the following activities, to the
extent that such activities are required or requested by the Company.
The services being provided by Xxxxxxx hereunder are being rendered
solely to the Board of Directors of the Company (the "Board"). These
services are not being rendered by Xxxxxxx as an agent or as a
fiduciary of the shareholders of the Company, and Xxxxxxx shall not
have any obligation or liability with respect to its services hereunder
to such shareholders or any other person, firm or corporation absent
fraud or willful misconduct by Xxxxxxx.
Xxxxxxx shall act as the Company's exclusive advisor concerning matters
pertaining to the Company's efforts to acquire VMdirect, L.L.C.
("VMdirect") in a reverse merger or similar transaction ("Reverse
Merger"). Xxxxxxx will assist the Company in: (i) the corporate,
business and financial due diligence evaluation of VMdirect; (ii) the
capital and transaction structuring; (iii) development of capital
markets strategy; (iv) valuation analysis; (v) company, market and
industry research; (vi) analysis of various exchange listing
requirements; and (vii) transaction negotiation and execution. The
services set forth in this paragraph shall be referred to herein in as
"Reverse Merger Services".
The parties hereto acknowledge and agree that Xxxxxxx is not rendering
legal advice or performing accounting or auditing services as part of
the services provided under this Agreement. Xxxxxxx shall be free to
provide services for other persons, which services shall not be deemed
to be in conflict with the services to be performed by Xxxxxxx under
this Agreement.
2. TERM. The term of this Agreement shall commence on the date of this
Agreement and continue until the earlier of the closing or the
abandonment of the Reverse Merger (the "Term"). The Term hereof may be
extended by the mutual written agreement of the parties hereto.
Notwithstanding anything contained herein to the contrary, the
provisions of Section 2 (Term), Section 3 (Compensation), Section 9
(Indemnification), Section 10 (Disclosure) and Section 11
(Miscellaneous) shall survive the termination and expiration of this
Agreement.
3. COMPENSATION. As compensation for the Reverse Merger Services rendered
by Xxxxxxx under this Agreement, upon closing of the Reverse Merger
between the Company and VMdirect, the Company shall pay Xxxxxxx a fee
of $500,000 at the closing of the Reverse Merger.
4. AFFILIATED COMPANIES. The Company acknowledges and agrees, and enters
into this Agreement with the full knowledge that, Xxxxxxx and its
officers, directors and affiliates may own, directly or indirectly, a
majority interest in the Company as of the date of this Agreement and
may have provided or may provide equity or debt financing to the
Company.
5. AVAILABILITY AND ACCURACY OF INFORMATION. The Company shall furnish
Xxxxxxx with all reasonable information and material requested or
required by Xxxxxxx involving the Company and VMdirect including,
without limitation, information concerning historical and projected
financial results, public and regulatory filings, material contracts
and commitments, proposed financings, acquisitions or other
transactions, and possible and known litigation, environmental and
other contingent liabilities of the Company and VMdirect
("Information"). The Company also agrees to make available to Xxxxxxx
such representatives of the Company and VMdirect, including, among
others, directors, officers, employees, outside counsel and independent
certified public accountants, as Xxxxxxx may reasonably request. The
Company will promptly advise Xxxxxxx of any material changes in the
Company's or VMdirect's business or finances. The Company represents
and warrants that the Information provided or made available to Xxxxxxx
by the Company and VMdirect, at all times during the Term hereof, is
and shall be complete and true 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 thereof not
misleading in light of the circumstances under which such statements
are made. The Company further represents and warrants that any
projections provided to Xxxxxxx will have been prepared in good faith
and will be based upon assumptions that, in light of the circumstances
under which they are made, are reasonable. The Company acknowledges and
agrees that in rendering its services hereunder Xxxxxxx will be using
and relying on the Information, without independent investigation,
appraisal or verification, and Xxxxxxx assumes no responsibility for
the accuracy or completeness of the Information.
6. INDEMNIFICATION. The Company agrees to indemnify and hold harmless
Xxxxxxx, its affiliates and their respective officers, directors,
members, partners, employees, agents and affiliates and control persons
of any of the above (each an "Indemnified Person") from and against all
claims, liabilities, losses or damages (or actions in respect thereof)
or other expenses that are related to or arise out of (i) actions taken
or omitted to be taken (including any untrue statements made or any
statements omitted to be made) by the Company, (ii) any breach of any
warranty, representation or agreement of Company contained in this
Agreement, or (iii) actions taken or omitted to be taken by an
Indemnified Person with the consent of or in conformity with the
2
actions or omissions of the Company. The Company shall not be
responsible, however, for any losses, claims, damages, liabilities or
expenses pursuant to the preceding sentence that are finally judicially
determined to have resulted from Xxxxxxx'x or such other Indemnified
Person's grossly negligent, reckless or wrongful conduct, and Xxxxxxx
agrees to indemnify and hold Company harmless from any claims, losses,
liabilities or damages incurred by the Company arising out of Xxxxxxx'x
grossly negligent, reckless or wrongful conduct as determined in a
final judicial determination. The Company agrees to reimburse each
Indemnified Person for all reasonable out-of-pocket expenses (including
reasonable fees and expenses of counsel for such Indemnified Person) of
such Indemnified Person in connection with investigating, preparing,
conducting or defending any such action or claim, whether or not in
connection with litigation in which any Indemnified Person is a named
party, or in connection with enforcing the rights of an Indemnified
Person under this Agreement. The indemnity agreements under this
Section shall survive the completion of services rendered for Company
by Xxxxxxx and the termination or expiration of this Agreement.
7. DISCLOSURE AND CONFIDENTIALITY. Any financial or other advice,
descriptive memoranda or other documentation rendered by Xxxxxxx
pursuant to this Agreement may not be disclosed publicly or to any
third party without the prior written approval of Xxxxxxx. All
non-public information provided by the Company to Xxxxxxx will be
considered confidential information and shall be maintained as such by
Xxxxxxx, except as required by law or as required to enable Xxxxxxx to
perform its services pursuant to this Agreement, until the same becomes
known to third parties or the public without release thereof by
Xxxxxxx. This provision is intended to insure, among other things, that
the parties at all times comply with the provisions of SEC Regulation
FD.
8. MISCELLANEOUS.
A. Before the Company releases any information referring to
Xxxxxxx'x role as the Company's financial advisor under this
Agreement or uses Xxxxxxx'x name in a manner which may result
in public dissemination thereof, the Company shall furnish
drafts of all documents or prepared oral statements to Xxxxxxx
for comments, and shall not release any information relating
thereto without the prior written consent of Xxxxxxx. Nothing
herein shall prevent the Company from releasing any
information to the extent that such release is required by
law.
B. The Company agrees that, following the consummation of any
transaction covered by this Agreement, Xxxxxxx shall have the
right to place advertisements in financial and other
newspapers and journals at Xxxxxxx'x expense, describing its
services to the Company hereunder, provided that Xxxxxxx will
submit a copy of any such advertisements to the Company for
its prior approval, which approval shall not be unreasonably
withheld.
C. The Company represents and warrants that this Agreement has
been duly authorized and represents the legal, valid, binding
and enforceable obligation of the Company and that neither
this Agreement nor the consummation of any transactions
contemplated hereby requires the approval or consent of any
governmental or regulatory agency or violates or conflicts
with any law, regulation, contract or order binding the
Company.
3
D. The terms, provision and conditions of this Agreement are
solely for the benefit of the Company and Xxxxxxx and the
other Indemnified Persons and their respective heirs,
successors and permitted assigns and no other person or entity
shall acquire or have a right by virtue of this Agreement.
This Agreement may not be assigned by either party without
prior written consent of the other party.
E. This Agreement contains the entire understanding and agreement
between the parties hereto with respect to Xxxxxxx'x
engagement hereunder, and all prior writings and discussions
are hereby merged into this Agreement. No provision of this
Agreement may be waived or amended except in a writing signed
by both parties. A waiver or amendment of any term or
provision of this Agreement shall not be construed as a waiver
or amendment of any other term or provision.
F. Each party represents and warrants that it will comply with
all applicable securities and other laws, rules and
regulations relating hereto and that it shall not circumvent
or frustrate the intent of this Agreement.
G. This Agreement may be executed by facsimile signatures and in
multiple counterparts, each of which shall be deemed an
original. It shall not be necessary that each party executes
each counterpart, or that any one counterpart be executed by
more than one party so long as each party executes at least
one counterpart.
H. If any provision of this Agreement is declared by any court of
competent jurisdiction to be invalid for any reason, such
invalidity shall not affect the remaining provisions of this
Agreement.
I. This Agreement shall be governed by and constructed under the
laws of the State of Colorado without regard to such state's
conflicts of law principles, and may be amended, modified or
supplemented only by written instrument executed by parties
hereto.
J. All disputes, controversies or claims ("Disputes") arising out
of or relating to this Agreement shall in the first instance
be the subject of a meeting between a representative of each
party who has decision-making authority with respect to the
matter in question. Should the meeting either not take place
or not result in a resolution of the Dispute within twenty
(20) business days following notice of the Dispute to the
other party, then the Dispute shall be resolved in a binding
arbitration proceeding to be held in Denver, Colorado in
accordance with the international rules of the American
Arbitration Association. The arbitrators may award attorneys'
fees and other related arbitration expenses, as well as pre-
and post-judgment interest on any award of damages, to the
prevailing party, in their sole discretion. The parties agree
that a panel of three arbitrators shall be required, all of
whom shall be fluent in the English language, and that the
arbitration proceeding shall be conducted entirely in the
English language. Any award of the arbitrators shall be deemed
confidential information for a minimum period of five years,
except to the extent public disclosure of such information is
required by applicable securities laws or regulations.
K. All notices required by the terms of this Agreement shall be
in writing and delivered to the other party at the addresses
set forth below, either by personal delivery, by a recognized
4
international overnight courier service, or by facsimile or
e-mail transmission. Notices will be deemed given as of the
date of receipt, which date shall be evidenced by the
signature of an authorized representative of the receiving
party or by written evidence of a successful transmission of
either a facsimile or e-mail message.
If to Xxxxxxx:
XXXXXXX SECURITIES, LLC
Attn: Xxxxxxx X. Xxxxxxx, President
0000 XXX Xxxxxxx, Xxxxx 0000
Xxxxxxxxx Xxxxxxx, Xxxxxxxx 00000-0000
(000) 000-0000 telephone
(000) 000-0000 fax
If to the Company:
XXXXX.XXX, INC.
Attn: Xxxxx Xxxxxxx, President
000X Xxxxxxxxx Xxxxxxxxx, Xxxxx 00
Xxxx Xxxxx, Xxxxxxx, X.X.X 00000
(000) 000-0000
(000) 000-0000 fax
or such other address as indicated by the Company as its
primary business address in its SEC filings.
[Remainder of this page intentionally left blank.]
5
If the forgoing correctly sets forth the entire understanding and
agreement between the Company and Xxxxxxx, please so indicate by executing this
Agreement as indicated below and returning an executed copy to Xxxxxxx together,
whereupon this Agreement shall constitute a binding agreement as of the date
first above written.
Very truly yours,
XXXXXXX SECURITIES, LLC
By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------------
Xxxxxxx X. Xxxxxxx, President
ACCEPTED AND AGREED TO:
Xxxxx.xxx, Inc.
By: /s/ Xxxxx X. Xxxxxxx
---------------------------
Xxxxx X. Xxxxxxx, President
Date: June 15, 2006
6
