[XXXXX X. BLUE LETTERHEAD]
October 17, 2000
Xxxxx Xxxxxxxx, Managing Director
Strategica Services Corporation
000 Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxx, Xxxxxxx 00000
RE: GASEL TRANSPORTATION LINES, INC.
Dear Xxxxx:
As per our conversation today, the engagement letter agreement between Gasel
Transportation Line, Inc. and Strategica Services Corporation dated October 16,
2000, is to include the following addendum:
"The exercise price for the warrants as set forth in Paragraph 3 of this
engagement letter shall not include as a factor in the calculation of the
price any shares that are sold by the Company upon exercise of warrants
that are currently outstanding to the directors of the Company."
You should indicate your acceptance of this addendum to the agreement by
signing, dating, and sending a copy of same to Gasel Transportation Lines, Inc.
together with the executed copy of the engagement letter. The engagement letter
is being executed and delivered to you by Gasel Transportation Lines, Inc.
conditioned upon acceptance of this addendum to the agreement by your company.
Sincerely,
Xxxxx X. Blue
Accepted on this the 17th day of October, 2000
by Strategica Services Corporation:
/s/ Xxxxx Xxxxxxxx /s/ Xxxxxxx X. Xxxxxxxxx
-------------------------- ----------------------------
Xxxxx Xxxxxxxx Xxxxxxx X. Xxxxxxxxx
Managing Director Managing Director
[STRATEGICA SERVICES CORPORATION LETTERHEAD]
PERSONAL AND CONFIDENTIAL
Xxxxxxx Xxxx, President October 16, 2000
Gasel Transportation Line, Inc.
Re: Strategica Services Corporation or its designee ("Strategica")
financial advisory agreement with Gasel Transportation, Inc. including any
affiliates and subsidiaries (collectively or separately "the Company")
Dear Mr. Xxxx:
This letter sets forth the basic terms of an agreement between Strategica
and the Company. We are hopeful that Strategica's relationship with you will
complement management and add value and synergies for the Company and its
shareholders. Consistent with the foregoing, the parties agree as follows:
1. Strategica is xxxxxx retained as the Company's consultant and
financial advisor for a period of 36 months. During the first 120 days
from the date of your acceptance of this agreement, Strategica's
arrangement with the Company shall be on an exclusive basis.
Thereafter Strategica's relationship shall be on a non-exclusive
basis. Strategica shall provide its advisory services as to all
proposals that come before the Company for consideration, whether or
not arranged or introduced by Strategica.
2. Initially, Strategica shall perform certain due diligence on the
Company, which could include its management, business plan and other
matters. The Company shall pay to Strategica a non-refundable due
diligence fee of $20,000 payable simultaneously with the execution of
this Agreement. Xxxxxxxxx would commence promptly after acceptance of
this agreement. Even before due diligence is complete and thereafter,
Strategica shall endeavor to arrange funds for the Company, which
initially is approximately $2,000,000 (or any other amount accepted by
the Company) as the initial funding used. From time to time,
Strategica may also seek to arrange or introduce additional funds,
business opportunities and relationships for the Company. In addition,
Strategica may assist the Company in meeting and obtaining
Xxxxxxx Xxxx, President
Gasel Transportation Lines, Inc.
September [Illegible], 2000
Page 2
opportunities sourced by third parties from time to time. The Company
and its principals agree to cooperate with us in due diligence and in
all efforts to raise funds and explore business opportunities and
relationships. Any funding proposal arranged or introduced by
Strategica may be in the form of debt or equity, or any combination
thereof. The amount, terms, format and documentation of any funding
shall be as determined by the funding source.
3. A mutually agreeable ownership participation in the overall parent
entity and subsidiaries will be determined post diligence. The
Strategica equity will be a meaningful minority portion of all
classes of equity on a fully diluted basis, in a range between 10%
to 15%. Strategica equity will be in the form of warrants for five
years at an exercise price equal to the lower of the market price as
of the date of this agreement; the prior average ninety-day daily
market price as of the date of a funding proposal (or a nominal price
to the extent there is no ascertainable trading market price); or the
lowest average ninety-day daily market price in effect each quarter
after the date of this agreement; or the lowest price from time to
time in which any shares are sold by the Company or are issuable or
salable by the Company after the date of this agreement. The warrants
will include anti-dilution provisions, piggyback and demand
registration rights, cashless exercise provisions and other provisions
in Strategica standard warrant form. The warrants shall be fully
earned and issued upon acceptance by the Company of any funding
proposal directly or indirectly arranged or introduced by Strategica
that is not abrogated by Strategica or other lending sources prior
to closing. The anti-dilution right shall be waived for any sales or
issuance of shares at or above $4.00 per share.
4. Upon the Company closing a funding proposal or other transaction
arranged or introduced or assisted by Strategica directly or
indirectly, then Strategica shall be paid $3,000 per month for
advisory services for a 36-month term. Also, for any transactions
arranged or introduced by Strategica directly or indirectly, the
Company shall pay to Strategica (a) 4% of the gross amount of any
debt, (b) 6% of the gross amount of any equity, and (c) 5% of the
value of any merger, acquisition, bulk asset sale, control block stock
or other equity sale, divestiture or other similar transactions.
Advisory services to be performed by Strategica may be rendered on a
non-exclusive basis after the initial 120-day exclusivity period. The
fees payable by the Company to any other person or entity shall not
reduce or otherwise affect any fee payable hereunder to Strategica by
the Company in accordance with this agreement.
5. The Company agrees to pay all Strategica's and any proposed funding
source's reasonable out-of-pocket costs and any third party fees
relating to diligence, our business arrangement with you, and any
proposed funding facility including, without limitation, travel,
lodging, meals, copies, telephone, printing, legal, investigative,
document preparation and other fees and expenses, and any fees and
costs of the ultimate funding source and/or underwriter and their
respective counsel and the fees and costs of all professionals
involved with this project. All such payments shall be made upon
Strategica's request, whether or not any transaction is concluded or
this
Xxxxxxx Xxxx, President
Gasel Transportation Lines, Inc.
September [Illegible], 2000
Page 3
agreement is terminated. Expenses in excess of $5,000 shall not be
incurred prior to obtaining written approval from the Company.
6. Strategica shall be entitled to designate a board member. The Company
shall obtain acceptable director and officer insurance, if available.
If there is no acceptable director and officer insurance or if
Strategica fails to designate its board members, then Strategica as
its option will be an advisor to the Board. In any event, Strategica
shall receive notice of all board, equity holder and committee
meetings and have the right to receive all meeting materials,
financial data and other data and the right to participate in all
discussions.
7. The parties acknowledge that Strategica may cause some of its duties
to be performed under the name of an affiliate and all rights and
benefits under this agreement in favor of Strategica shall likewise be
available to any other affiliate.
8. The Company is not obligated to consummate any proposed funding or
other transaction or business opportunity (each a "Transaction"), and
the Company may determine which Transactions, if any, are in its best
interests. However, as to any Transaction, if the Company either: (a)
fails to accept a proposed Transaction arranged or introduced or
assisted by Strategica and then conducts another Transaction on
similar or less favorable terms as the proposed Transaction within 12
months of when presented to the Company; or (b) accepts the terms of a
Strategica arranged, introduced or assisted Transaction and fails to
close for any reason; then the fees and equity that would have been
obtained from closing the Strategica arranged Transaction shall be
paid to Strategica. The consideration (i.e. fees, equity and rights)
receivable by Strategica under this Agreement shall not be a factor in
determining the favorability of the terms of any Transaction to the
Company and the Company agrees after the exclusivity period, to give
Strategica the reasonable opportunity to equal or better the terms of
any third party arranged Transaction. Although the Company may conduct
discussions with any third parties regarding financing and other
matters, the Company shall refer all expressions of interest from
third parties in any financing, transaction or material contract with
the Company to Strategica promptly after the Company becomes aware of
it.
9. Each party represents that there are no brokers or finders entitled to
a fee or commission in connection with the introduction of the parties
to each other.
10. Florida law shall govern this Agreement, and the venue for resolving
legal and interpretative issues shall be the state or Federal courts
in Miami-Dade County, Florida. The parties hereby consent to personal
jurisdiction in such forum and to personal service of process by mail.
In any litigation arising out of this agreement, the prevailing party
shall be entitled to recover reasonable attorney's fees and costs.
11. The parties acknowledge that Strategica has various professionals in
its employ and ownership, such as lawyers and accountants. The parties
acknowledge that these
Xxxxxxx Xxxx, President
Gasel Transportation Lines, Inc.
September [Illegible], 2000
Page 4
persons have not and are not acting in their professional capacity on
behalf of any of the parties or on behalf of the Company. Each of the
parties represents that it has been advised to seek independent legal
counsel. Each of the parties represents that it has sought and
obtained, and will continue to seek and obtain as necessary from time
to time, the advice of independent legal and accounting professional
advice in connection with this venture and does not and will not seek
to obtain the advice of, or to retain any of, the legal and accounting
professionals affiliated with Strategica from time to time for any
professional advice for themselves or the Company.
12. By signing below, the parties acknowledge good and valuable
consideration for this agreement and that this agreement has been
approved by the parties hereto and executed with the advice and
approval of their respective independent counsel and duly authorized
by all relevant action, corporate and otherwise, and anyone else whose
consent is required. You agree to cooperate and deliver all documents
with respect to this matter contemplated by this agreement or
otherwise reasonably requested by Strategica or its counsel. This
agreement shall not be construed more stringently against the drafting
party since all parties and their respective counsel contributed to
the negotiation and drafting of this agreement and each party has had
the advice of separate and independent legal counsel in the review and
drafting of this agreement. If any litigation arises from this
agreement, the prevailing party may recover reasonable attorney's fees
and costs.
13. The Company hereby agrees to indemnify, defend and hold harmless
Strategica and its respective affiliates, directors, officers,
employees, managing directors, principals, shareholders, agents,
controlling persons, attorneys, auditors and accountants, from and
against any and all losses, claims, damages and liabilities, joint or
several, to which such Indemnified Party may become subject under any
applicable law or suit related to or arising out of the matters
described in this Agreement including the performance of any services
for the Company and undertaking any negotiations on behalf of the
Company with third parties and for the consequences of any such
negotiations, and the Company will reimburse each Indemnified Party
for all fees and expenses (including reasonable counsel fees and
expenses) as they are incurred in connection with the investigation
of, preparation for, and defense of any pending or threatened claim or
any action or proceeding arising there from, whether or not such
Indemnified Party is a party and the prosecution and defense of any
counter claims, cross claims and third party claims arising there from
(sic) or related thereto. The Company shall defend the Indemnified
Parties with counsel who shall be selected by Strategica and shall
fund such retainers and payments as required by such counsel. The
Company will not be liable under the foregoing indemnification
provision in respect of any loss, claim, damage, or liability to the
extent that a court of competent jurisdiction shall have determined by
a final judgment that such loss; claim, damage or liability resulted
primarily from the Indemnified Party's willful misconduct. The Company
shall execute and deliver to Strategica and each other Indemnified
Party such additional indemnification agreements as any of them shall
require supplementing the aforementioned indemnification agreement.
Xxxxxxx Xxxx, President
Gasel Transportation Lines, Inc.
September [Illegible], 2000
Page 5
14. The parties hereby waive the right to a jury trial in any legal
proceeding among them.
15. You understand that no assurance is given that any particular funding
or resources or transaction will be arranged or introduced or assigned
to the Company by or through Strategica or that any subsequent funding
or resources will be available after any one stage of funding is
concluded. This letter should not be construed as a funding commitment
or as a commitment to grant or arrange for any particular funding,
debt or equity.
Please signify your agreement with these terms by signing below and
returning by Friday, October 30, 2000. Also include your non-refundable
diligence fee of $20,000 and a $5,000 expense deposit. We are prepared to
accommodate immediately. Thank you.
Sincerely,
STRATEGICA SERVICES CORPORATION
/s/ Xxxxx Xxxxxxxx
Xxxxx Xxxxxxxx
Managing Director
/s/Xxxxxxx X. Xxxxxxxxx
Xxxxxxx X. Xxxxxxxxx
[ILLEGIBLE] Managing Director
ACCEPTED:
Gasel Transportation Line, Inc.
By:/s/ Xxxxxxx Xxxx Pres Date: 10/17 ,2000
---------------------------- ----------------
Xxxxxxx Xxxx, President
Duly authorized
