EXHIBIT 16
FINANCIAL ADVISORY AGREEMENT
THIS AGREEMENT is made and entered into June 6, 2002 by and between CALIM
PRIVATE EQUITY, LLC, a limited liability company (the "Advisor"), and BLUE POINT
SYSTEMS, a -------------, (the "Company").
RECITALS
WHEREAS, the Company has requested the assistance of the Advisor in
accessing the capital markets, the provision of financial advisory services and
for other financial advice and assistance; and
WHEREAS, the Advisor is willing to perform such services on the terms and
conditions specified herein,
NOW, THEREFORE in consideration of the foregoing and the mutual terms and
provisions contained in this Agreement, the parties hereto agree as follows:
1. Engagement.
The Company hereby engages the Advisor to serve as its financial advisor
for the term and in accordance with the provisions of this Agreement. The
Advisor accepts the engagement on the basis specified herein.
2. Term.
(a) The term of this Agreement (as it may be extended pursuant to (b)
below, the "Term") shall commence on the date hereof and end on June 30, 2003.
Notwithstanding the foregoing, if at the end of the Term any Transaction (as
hereinafter defined) is then pending, the Term shall be extended until the
completion or abandonment of the Transaction.
(b) The Term shall be extended for successive one-year periods without
further act or deed of the parties unless either of them provide written notice
to the other no later than 30 days prior to the then-pending end of the Term of
its election to terminate this Agreement, in which event this Agreement shall
end on the December 31 next following the notice of election.
3. Services.
(a) In consideration for the performance by the Company of its obligations
and the other agreements of the Company hereunder, the Advisor agrees to perform
the services specified in this Section 3 (collectively, the "Services").
(b) The Services shall consist of normal financial advisory services to be
rendered to a start-up company in need of a broad array of financial advice, as
well as certain specific services, including without limitation the following:
(i) assisting the Company in the development and maintenance of its
financial plan, including budgeting, financial management and planning,
resource allocation, accounting, reporting and other similar matters.
(ii) assisting the Company in the development, structuring and
implementation of its capital access strategies, including without
limitation all bank and third party financings, which involve the raising
of capital for the Company, whether equity, debt, convertible securities or
otherwise (collectively, "Transactions").
(iii) providing all such other financial advisory services as the
Company may reasonably request from time to time during the Term.
(c) The Advisor agrees to keep confidential all information received by it
from the Company during the Term which is either identified by the Company or
which may otherwise reasonably be considered proprietary or confidential in
nature, except to the extent (i) such information is disclosed by the Advisor in
the performance of Services at the request or with the consent of the Company;
(ii) such information is in the public domain or is otherwise disclosed by or on
behalf of someone other than the Advisor; or (iii) the Advisor is otherwise
required to disclose such information by a court or administrative agency of
appropriate jurisdiction.
(d) In its provision of Services hereunder, the Advisor shall use its best
good faith efforts to assist the Company in attaining the financial objectives
identified by the Company and the Advisor during the Term; however, it is
understood by the Company that the Advisor cannot and does not guaranty, or
otherwise provide assurances, that the Company will in fact attain any such
objectives or consummate any Transaction during the Term.
4. Representations and Warranties of the Company.
(a) The Company represents and warrants that it has the full power and
authority to execute, deliver and perform this Agreement, that its execution,
delivery and performance has been duly authorized by all necessary action and
that this Agreement is the valid and binding agreement of the Company,
enforceable against it in accordance with its terms.
(b) All representations, warranties and other information provided by the
Company to the Advisor hereunder, or in any Disclosure Document (as hereinafter
defined) shall be true and correct as of the date given or made in all material
respects and shall not contain any untrue fact or fail to state a material fact
required to be given or stated therein or necessary to make the information so
given or stated not misleading
5. Agreements of the Company.
(a) The Company agrees to provide the Advisor and its authorized
representatives with full access at all reasonable times and upon reasonable
prior notice to the Company's books and accounts, records, personnel,
facilities, properties and assets so as to enable the Advisor to gain the
knowledge regarding the Company necessary for the performance of Services.
(b) Upon the reasonable request of the Advisor, the Company will provide
it with all such information, data, compilations, summaries, descriptions and
other materials that the Advisor deems reasonable and appropriate in connection
with the performance of Services, including without limitation the development,
preparation and marketing of a Transaction.
(c) The Company agrees to provide the Advisor with reasonable prior notice
of, and the right to attend and observe, all meetings of its shareholders and
board of directors.
(d) The Company agrees to indemnify and hold harmless the Advisor, its
directors, managers, officers, employees and agents and each person, if any, who
controls the Advisor within the meaning of Section 15 of the Securities Act of
1933, as amended (the "Securities Act"), or Section 20 of the Securities
Exchange Act of 1934, as amended, against any and all losses, claims, damages or
liabilities, joint or several, to which the Advisor or such controlling person
may become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon (i) any untrue statement or alleged untrue statement made
by the Company to the Advisor or to any other person in connection with the
provision of Services, a Transaction or otherwise; (ii) any untrue statement or
alleged untrue statement of any material fact contained in any offering document
or supplement or amendment thereto made or prepared in connection with a
Transaction (any such offering document, supplement or amendment being a
"Disclosure Document"); or (iii) the omission or alleged omission to state in
any Disclosure Document a material fact required to be stated therein or
necessary to make the statement therein not misleading, and the Company will
reimburse, as incurred, each such indemnified party for any legal or other costs
or expenses reasonably incurred by it in connection with investigating,
defending against or appearing as a third-party witness in connection with any
such loss, claim, damage, liability or action.
6. Compensation.
(a) In consideration of the agreement of the Advisor to perform Services
hereunder, the Company covenants and agrees to pay the Advisor a financial
advisory retainer fee equal to $10,000 a month, commencing May 1, 2002 and
payable on the 1th day of each month. If, in any month, the Advisor renders
Services in excess of 25 hours, the Advisor shall be entitled to further
compensation at a rate equal to $250 per each additional hours of Services
rendered in the applicable month. The Company shall be entitled to a reasonable
accounting by the Advisor for the Services rendered each month, but the Advisor
shall be entitled to its monthly retainer fee regardless of the level of
services rendered by it during the particular month. In the event the Company,
with the reasonable consent of the Advisor, determines for any particular month
that it does not have the liquidity to pay the monthly retainer, in whole or in
part, the amount so deferred shall accumulate and be payable in cash as soon as
practicable but in any event upon the end of the Term.
(b) In addition to the fee payable pursuant to (a) above, in connection
with each Transaction that is consummated during the Term, or which is
structured by the Advisor or which the Advisor otherwise contributes to but
which is consummated in the six-month period following the conclusion of the
Term, the Company agrees to pay the Advisor a fee equal to the sum of (i) five
percent of the first amount of the gross proceeds receivable by the Company in
connection with the Transaction ("Gross Proceeds") up to $10.0 million; (ii) 3.5
percent of the Gross Proceeds in excess of $10.0 million up to $25.0 million;
(iii) 2.5 percent of the Gross Proceeds in excess of $25.0 million up to $100.0
million; and (iv) two percent of the Gross Proceeds in excess of $100.0 million.
The fee payable hereunder shall be in addition to, and not be subject to any
reduction as the result of, any other underwriting or placement fees that may be
incurred by the Company in connection with any Transaction.
(c) In addition to the foregoing, the Company agrees to pay or reimburse
the Advisor promptly upon invoice for its reasonable expenses paid or incurred
by it in the performance of Services.
8. Entire Agreement and Amendments.
This Agreement constitutes the entire agreement of the parties with
respect to the subject matter hereof, and replaces and supercedes any prior
agreements of the parties. No amendment, supplement, waiver or modification to
this Agreement shall be effective unless it is in writing and signed by the
Company and Calim.
8. Notices.
All notices, requests and demands to or upon the respective parties hereto
shall be effective and shall be deemed to have been duly given or made, unless
otherwise expressly provided herein, when deposited in the mail, postage
prepaid, or when made by hand delivery or recognized commercial overnight
delivery service and addressed:
If to the Company: Blue Point Systems
0000 Xxxxxxxx Xxxx
Xxxxxxx Xxx, Xxxxxxxxxx
Attention: Xxx X. Xxxxxxxx
If to the Advisor: Calim Private Equity, LLC
P. O. Xxx 0000
Xxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx Xxxxxx
with a copy to: Xxxx X. Xxxxxx, Esq.
Xxxxxx Xxxxxx Xxxxxxxxxx, LLP
0000 Xxxxxx Xxxxxx
Xx Xxxx, Xxxxx 00000
Addresses to which notices shall be sent may be changed by providing each party
with notice of the change in address in the method provided above.
9. Survival of Representation and Warranties .
All representations and warranties made by the Company in this Agreement
and in any Disclosure Document or statement delivered pursuant hereto or in
connection with any Transactions shall survive the execution and delivery of
this Agreement, the applicable Disclosure Document or the consummation of the
applicable Transaction, as the case may be.
10. Successors and Assigns.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns, except that the
Company may not assign or transfer any of its rights or obligations under this
Agreement without the prior written consent of the Advisor, and any such
attempted assignment or transfer shall be void and of no force and effect.
11. Counterparts.
This Agreement may be executed by the parties to this Agreement on any
number of separate counterparts; and all of the counterparts taken together
shall be deemed to constitute one and the same instrument. Additionally, a
facsimile counterpart of this Agreement shall have the same effect as an
originally executed counterpart.
12. Governing Law.
This Agreement, and the rights and obligations of the parties under this
Agreement shall be governed by, and construed and interpreted in accordance
with, the laws of the State of Colorado (without reference to the choice of law
provisions of state law) except with respect to matters of law concerning the
internal corporate affairs of any corporate entity which is a party to or the
subject of this Agreement, and as to those matters the law of the jurisdiction
under which the respective entity derives its powers shall govern.
13. Severability.
If any section, clause or provision of this Agreement is ruled invalid or
unenforceable by a court of competent jurisdiction, the invalidity or
unenforceability thereof shall not affect any of the remaining sections, clauses
or provisions hereof or thereof, and this Agreement shall continue in full force
and effect as if such invalid or unenforceable provision had not been contained
therein.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the date and year specified above.
BLUE POINT SYSTEMS
By: /s/ Xxx X. Xxxxxxxx
----------------------
Authorized Officer
CALIM PRIVATE EQUITY, LLC
By: /s/ Xxxxxxx X. X. Xxxxxx
-------------------------
Authorized Officer
