FINANCIAL ADVISORY AND INVESTMENT BANKING AGREEMENT
This Agreement is made and entered into as of the 6th day of April 1998 by
and between The Thornwater Company, L.P. ("Consultant"), and Xxxxxx Electronics,
Inc., a New York 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 Consultant for the term specified in
Paragraph 2 hereof to render consulting 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 for a three (3) year period commencing April 6,
1998 and ending on April 5, 2001.
3. Duties of Consultant: During the term of this Agreement, Consultant
shall seek out Transactions (as hereinafter defined) on behalf of the Company
and shall furnish advice to the Company in connection with any such
Transactions.
4. Compensation: In consideration for the services rendered by Consultant
to the Company pursuant to this Agreement (and in addition to the expenses
provided for in Paragraph 5 hereof), the Company shall compensate Consultant as
follows:
(a) The Company shall pay Consultant a fee of $3,435 per month for the term
of this Agreement. The aggregate sum of $123,660 shall be due and payable upon
the execution of this Agreement.
(b) In the event that any Transaction occurs during the term of this
Agreement or, to the extent provided in paragraph 4(d) hereof, one year
thereafter, the Company shall pay fees to Consultant as follows:
Consideration Fee
$0 to $ 500,000 Minimum Fee of $25,000
$500,000 to $5,000,000 5% of Consideration
$5,000,000 or more $250,000 plus 1% of the Consideration in excess of $5,000,000
For the purposes of this Agreement, "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 Consultant shall be paid by Consultant.
(c) For the purposes of the Agreement, a "Transaction" shall mean (i) any
transaction originated by Consultant, other than in the ordinary course of trade
or business of the Company, whereby, directly or indirectly, control of the
Company or any of its businesses , is transferred for Consideration, or (ii) any
transaction originated by Consultant whereby the Company acquires any other
company or the assets of any other company or a controlling interest in any
other company (an "Acquisition").
In the event Consultant originates a line of credit with a lender or a
corporate partner, the Company and Consultant will mutually agree on a
satisfactory fee and the terms of payment of such fee. In the event Consultant,
at the Company's request, 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 five percent (5%) 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.
(d) All fees to be paid pursuant to this Agreement, except as otherwise
specified, are due and payable to Consultant 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, Consultant shall be
entitled to a 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 Consultant: In addition to the fees payable hereunder and
regardless of whether any Transaction set forth in Paragraph 4 hereof is
proposed or consummated, the Company shall reimburse Consultant for the
reasonable fees and disbursements of Consultant's counsel and Consultant's
reasonable travel and out-of-pocket expenses incurred in connection with the
services performed by Consultant pursuant to this Agreement and at the request
of the Company, including without limitation, hotels, food and associated
expenses and long-distance telephone calls, except that all expenses exceeding
$500 must be pre-approved in writing by the Company.
6. Liability of Consultant: The Company acknowledges that all opinions and
advice (written or oral) given by Consultant to the Company in connection with
Consultant's engagement hereunder 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 Consultant 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 Consultant, or use
Consultant's name in any annual reports or any other reports or releases of the
Company without Consultant's prior written consent which consent shall not be
unreasonably withheld.
The Company acknowledges that Consultant 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 Consultant will, when and if prepared,
be done solely on the merits or judgment of analysis of Consultant or any senior
corporate finance personnel of Consultant.
7. Consultant's Services to Others: The Company acknowledges that
Consultant and its affiliates are in the business of providing financial
services and consulting advice to others. Nothing herein contained shall be
construed to limit or restrict Consultant in conducting such business with
respect to others, or in rendering such advice to others, except that Consultant
will not provide services to others when such services, in the Company's
reasonable discretion may materially and adversely affect the Company.
8. Company Information:
(a) The Company recognizes and confirms that, in advising the Company and
in fulfilling its engagement hereunder, Consultant will use and rely on data,
material and other information furnished to Consultant by the Company. The
Company acknowledges and agrees that in performing its services under this
Agreement, Consultant may rely upon the data, material and other information
supplied by the Company without independently verifying the accuracy,
completeness or veracity of same.
(b) Except as contemplated by the terms hereof or as required by applicable
law, Consultant 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 such of its employees
and advisors as Consultant reasonably determines to have a need to know.
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9. Indemnification:
(a) The Company shall indemnify and hold Consultant harmless against any
and all liabilities, claims, lawsuits, including any and all awards and/or
judgments to which it may become subject under the Securities Act of 1933, as
amended (the "1933 Act"), the Securities Exchange Act of 1934, as amended (the
"Act") or any other federal or state statute, at common law or otherwise,
insofar as said liabilities, claims and lawsuits (including costs, expenses,
awards and/or judgments) arise out of or are in connection with the services
rendered by Consultant or any transactions in connection with this Agreement,
except for any liabilities, claims and lawsuits (including awards and/or
judgments), arising out of acts or omissions of Consultant. In addition, the
Company shall also indemnify and hold Consultant harmless against any and all
costs and expenses, including reasonable counsel fees, incurred relating to the
foregoing.
Consultant shall give the Company prompt notice of any such liability,
claim or lawsuit which Consultant contends is the subject matter of the
Company's indemnification and the Company thereupon shall be granted the right
to take any and all necessary and proper action, at its sole cost and expense,
with respect to such liability, claim and lawsuit, including the right to
settle, compromise and dispose of such liability, claim or lawsuit, excepting
therefrom any and all proceedings or hearings before any regulatory bodies
and/or authorities.
Consultant shall indemnify and hold the Company harmless against any and
all liabilities, claims and lawsuits, including any and all awards and/or
judgments to which it may become subject under the 1933 Act, the Act or any
other federal or state statute, at common law or otherwise, insofar as said
liabilities, claims and lawsuits (including costs, expenses, awards and/or
judgments) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact required to be stated or necessary to make the
statement therein, not misleading, which statement or omission was made in
reliance upon information furnished in writing to the Company by or on behalf of
Consultant for inclusion in any registration statement or prospectus or any
amendment or supplement thereto or in connection with any Transaction to which
this Agreement applies or which otherwise arises. In addition, Consultant shall
also indemnify and hold the Company harmless against any and all costs and
expenses, including reasonable counsel fees, incurred relating to the foregoing.
The Company shall give Consultant prompt notice of any such liability,
claim or lawsuit which the Company contends is the subject matter of
Consultant's indemnification and Consultant thereupon shall be granted the right
to take any and all necessary and proper action, at its sole cost and expense,
with respect to such liability, claim and lawsuit, including the right to
settle, compromise or dispose of such liability, claim or lawsuit, excepting
therefrom any and all proceedings or hearings before any regulatory bodies
and/or authorities.
(b) In order to provide for just and equitable contribution under the Act
in any case in which (i) any person entitled to indemnification under this
Paragraph 9 makes claim for indemnification pursuant hereto but it is judicially
determined (by the entry of a final judgment or decree by a court of competent
jurisdiction and the expiration of time to appeal or the denial of the last
right of appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that this Paragraph 9 provides for indemnification in
such case, or (ii) contribution under the Act may be required on the part of any
such person in circumstances for which indemnification is provided under this
Paragraph 9, then, and in each such case, the Company and Consultant shall
contribute to the aggregate losses, claims, damages or liabilities to which they
may be subject (after any contribution from others) in such proportion taking
into consideration the relative benefits received by each party from the
transactions undertaken in connection with this Agreement (taking into account
the portion of the proceeds realized by each), the parties' relative knowledge
and access to information concerning the matter with respect to which the claim
was assessed, the opportunity to correct and prevent any statement or omission
and other equitable considerations appropriate under the circumstances; and
provided, that, in any such case, no person guilty of a fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation.
Within fifteen (15) days after receipt by any party to this Agreement (or
its representative) of notice of the commencement of any action, suit or
proceeding, such party will, if a claim for contribution in respect thereof is
to be made against another party (the "Contributing Party"), notify the
Contributing Party of the commencement thereof, but the omission so to notify
the Contributing Party will not relieve it from any liability which it may have
to any other party other than for contribution hereunder. In case any such
action, suit or proceeding is brought against any party, and such party notifies
a Contributing Party or his or its representative of the commencement thereof
within the aforesaid fifteen (15) days, the Contributing Party will be entitled
to participate therein with the notifying party and any other Contributing Party
similarly notified. Any such Contributing Party shall not be liable to any party
seeking contribution on account of any settlement of any claim, action or
proceeding effected by such party seeking contribution without the written
consent of the Contributing Party, which consent shall not be unreasonably
withheld. The indemnification provisions contained in this Paragraph 9 are in
addition to any other rights or remedies which either party hereto may have with
respect to the other or hereunder.
10. Consultant an Independent Contractor: Consultant shall perform its
services hereunder as an independent contractor and not as an employee of the
Company or an affiliate thereof. The parties hereto expressly understand and
agree that Consultant 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. Miscellaneous:
(a) This Agreement between the Company and Consultant 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.
(b) Any notice or communication permitted or required hereunder shall be in
writing and shall be deemed sufficiently given if hand-delivered (i) five
calendar days after being sent postage prepaid by registered mail, return
receipt requested, or (ii) one business day after being sent by facsimile with
confirmatory notice by U.S. mail, 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: Xxxxxx Electronics, Inc.
000 Xxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Att: Chairman
Telecopy No.: 201-842-0660
With a courtesy copy to: Xxxx Xxxxxx, Esq.
Moscou, Ruskin et al
000 Xxx Xxxxxxx Xxxx
Xxxxxxx, Xxx Xxxx 00000-0000
Telecopy No.: 000-000-0000
If to Consultant, to: The Thornwater Company, L.P.
000X Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Att: Managing Director
Telecopy No.: (000) 000-0000
with a courtesy copy to: Xxx X. Xxxxxxxxx, Esq.
Gersten, Savage, Xxxxxxxxx
& Xxxxxxxxxx, LLP
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy No.: (000) 000-0000
(c) 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.
(d) This Agreement may be executed in any number of counterparts, each of
which together shall constitute one and the same original document.
(e) No provision of this Agreement may be amended, modified or waived,
except in a writing signed by all of the parties hereto.
(f) This Agreement shall be construed in accordance with and governed by
the laws of the State of New York, without giving effect to its conflict of law
principles.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
THE THORNWATER COMPANY, L.P.
By:/s/Xxxxxx X'Xxxxxx
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Name: Xxxxxx X'Xxxxxx
Title: Managing Director
XXXXXX ELECTRONICS, INC.
By:/s/Xxxxxxxx X. Xxxx
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Xxxxxxxx X. Xxxx, President
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