January 24, 2007 Mr. David Riedel Objective Equity LLC
January
24, 2007
Mr.
Xxxxx
Xxxxxx
Objective
Equity LLC
00
Xxxxxxx Xxxxxx 0 X
Xxx
Xxxx,
XX 00000
Dear
Xx.Xxxxxx:
When
executed by the undersigned where indicated below, this letter will form an
Advisory Agreement (the “Agreement”) for the twenty four month period commencing
January 9, 2007 between Objective Equity LLC (“OE”) and Clear Choice or it’s
successor. (“CC”) whereby you will provide certain advisory services to CC on a
non-exclusive best efforts basis, including general corporate finance, advisory,
M&A and business development services.
OE
will
devote a portion of his professional resources to CC during the course of this
agreement; CC acknowledges that it is engaging OE on a best efforts basis.
A.
Advisory
Services to Be Performed for CC
1.
Merger
and Acquisition Services.
OE will
assist CC in identifying potential merger and/or acquisition candidates to
CC.
OE will assist in contacting pre-approved target companies and in structuring
such transactions on an exclusive basis for the period of this contract.
Compensation:
CC
agrees to pay to OE at Closing in like-kind compensation an M&A Success Fee
according to a Xxxxxx Formula based on the value of the transaction as follows:
5% of the first $4 million in value, 4% of the second $4 million in value,
3% of
the third $4 million in value, 2% of the fourth $4 million in value and 1%
of
all value thereafter. Value will be determined based on the value of common
stock issued at its then fair market value plus any cash paid to the owners
for
the company acquired. Cash paid in the form of a loan is not included in the
determination of acquisition value.
In
addition, CC agrees to pay a $100,000.00 (one hundred thousand dollar) cash
bonus upon successful closing of an M&A transaction valued at $5,000,000.00
or greater.
2.
Corporate
Advisory and Financial Placement Services.
OE will
make itself available to offer on going corporate advisory and finance services
to CC on a best efforts basis.
Compensation
Advisory Services:
CC will
issue to OE 500,000 restricted shares of Clear Choice Stock and a $5,000 per
month fee will be paid by CC to OE for its minimum services once CC has raised
2mm in additional funding. Additionally, CC will pay OE a rate of $250.00 per
hour for any hours incurred by OE in excess of 40 hours per month.
(a)
Placement Fees.
The
Company shall pay to OE a cash placement fee equal to 8% of the total purchase
price of the Company’s securities sold including all amounts placed in an escrow
account or payable in the future (including future issuances resulting from
anti
dilution provisions) and all amounts paid or payable upon exercise, conversion
or exchange of such securities received or receivable directly by the Company
(“Aggregate
Consideration”)
in any
placement of the Company’s securities in connection with OE’s efforts hereunder.
Such consideration paid in cash shall be paid directly to OE out of escrow,
as
and when such consideration is paid to the Company. Notwithstanding the
foregoing, in connection with the exercise of any investor warrants issued
in
connection with a placement of the securities in connection with OE’s efforts
hereunder, OE’s placement fee shall be reduced to 4% of the cash proceeds and
shall be paid on receipt of such funds into the escrow account established
for
this purpose by the Company.
(b)
Warrants.
On each
closing date on which Aggregate Consideration is paid or becomes payable, the
Company shall issue to OE warrants equal to 8% of the funds (the “Warrants”)
per $1
million raised by OE or through any of its introductions. The exercise price
of
the Warrants shall equal the lower price (to any investor(s)) at which any
common equity of the Company is or may be sold in such placement or upon the
conversion, exercise or exchange of such securities. The Warrants shall be
exercisable immediately after the date of issuance, and shall expire 3 years
after the date of issuance, unless otherwise extended by the Company. The
Warrants shall be transferable, subject only to the securities laws, by the
holders thereof. OE represents covenants and agrees that it will obtain the
Warrants for investment purposes for its own account only and will not sell,
offer to sell, distribute or offer to distribute, the Warrants or securities
of
the Company into which the Warrants are convertible, without being registered
under the Securities Act of 1933, as amended.
(c)
Tail
Period.
The
Company shall and shall have caused its affiliates to pay OE all compensation
described in this Section 3 with respect to all financings with introduced
parties at any time prior to the expiration of 18 months after the Termination
Date (the “Tail Period”).
3.
General Business Development Services.
OE will
assist CC, on a best efforts basis, in the identification of new U.S. and
international business development opportunities including but not limited
to
(i) new marketing and distribution channels, (ii) new strategic marketing,
co-marketing, or private label agreements, or (iii) new technology, hardware
or
software partners, or (iv) new research clients.
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2
Compensation:
OE and
CC agree to negotiate in good faith, in advance, a compensation schedule for
Business Development Services provided by OE on a case-by-case basis. In general
OE will expect a fee of approximately 10% of the revenues for a period of one
year, which compensation shall survive termination of this Advisory Agreement.
B.
Expenses
CC
agrees
to reimburse OE for reasonable out-of-pocket travel expenses related to OE's
performance of the services described in this Agreement (i.e. travel and lodging
for OE professionals to destinations where CC has requested or approved the
presence of OE professionals).
C.
Term
of Agreement
The
term
of this Agreement shall commence on January 24, 2007 and shall be in effect
for
twenty four months, automatically renewable for an additional 12 months unless
terminated in writing by CC, OE’s compensation shall survive termination of this
Agreement according to the following terms:
D.
Indemnification
OE
and CC
agree to indemnify and hold each other harmless against claims resulting from
actions or omissions in connection with this engagement or arising out of
willful misstatement of material facts by the other party or its affiliates
or
representatives.
E.
Governing
Law
This
Agreement shall be governed by the laws of the State of New York.
F.
Signatures
By
their
authorized signatures below, OE and CC do agree to be bound by the terms of
this
Agreement. This Agreement may be signed in counterparts, including fax
signatures. Changes in the terms and conditions of this Agreement may be enacted
only with mutual written consent.
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3
| G. |
Acceptance
or Rejection by CC
|
CC
shall
have the exclusive right, in its sole discretion, to accept or reject any
business opportunity, or advice presented, discovered or procured by OE pursuant
to this agreement. As long as business opportunity is rejected within 5 business
of presentation to CC by OE. In the event of a rejection by CC, for any reason,
OE shall not be entitled to any of the compensation that would have been payable
hereunder, if the transaction had been consummated. OE is, furthermore, not
authorized to enter into any agreements with any person or entity on behalf
of
CC
| H. |
Confidentiality
|
In
the
course of rendering the services provided for in this Agreement, CC will learn
and may develop information which is considered by OE to be confidential. CC
agrees not to use or disclose such confidential information, except for the
purpose of performing its duties hereunder, without the express written consent
of OE.
| ACCEPTED FOR CC | |||
| /s/ Xxxxxxx X. Xxxxxxxx | |||
|
Xxxxxxx X. Xxxxxxxx |
|||
| Chief Financial Officer |
| ACCEPTED FOR OE | |||
| /s/ Xxxxx Xxxxxx | |||
|
Mr. Xxxxx Xxxxxx |
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