EXHIBIT 10 (ah)
October 28, 1997
Xx. Xxxxx X. Xxxxxxxx
Chairman of the Board
Saratoga Brands, Inc.
0000 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxxxx 00000
Dear Xx. Xxxxxxxx:
THIS AGREEMENT (the "AGREEMENT") is made as of October 28, 1997 between
Saratoga Brands Inc. ("SARATOGA") and X.X. Xxxxxxxx & Co., Inc. ("XXXXXXXX").
In consideration of the mutual covenants contained herein and intending to
be legally bound thereby, SARATOGA and XXXXXXXX hereby agree as follows:
1. XXXXXXXX will perform investment banking services on a non-exclusive basis
for SARATOGA on the terms set forth below for a period of five years from the
date hereof. Such services will be performed on a best efforts basis and will
include, without limitation, assistance to SARATOGA in mergers, acquisitions and
internal capital structuring and the placement of new debt and equity issues of
SARATOGA, all with the objective of accomplishing SARATOGA's business and
financial goals. In each instance, XXXXXXXX shall endeavor, subject to market
conditions, to assist SARATOGA in identifying corporate candidates for mergers
and acquisitions and sources of private and institutional funds; to provide
planning, structuring, strategic and other advisory services to SARATOGA; and to
assist in negotiations on behalf of SARATOGA. In each instance, XXXXXXXX will
render such services as to which SARATOGA and XXXXXXXX mutually agree, and
XXXXXXXX will exert its best efforts to accomplish the goals agreed to by
XXXXXXXX and SARATOGA.
2. In connection with the performance of this AGREEMENT, XXXXXXXX and SARATOGA
shall comply with all applicable laws and regulations, including, without
limitation, those of the National Association of Securities Dealers, Inc. and
the Securities and Exchange Commission.
3. In consideration of services to be rendered by XXXXXXXX hereunder, XXXXXXXX
is hereby granted Warrants to purchase 250,000 shares of Common Stock of
SARATOGA at a price of $0.50 per share, and 250,000 shares of Common Stock of
SARATOGA at a price of $0.60 per share, a total of 500,000 shares of Common
Stock of SARATOGA, with demand and piggy back registration of rights as set
forth in paragraph 6 below. Such Warrants ("XXXXXXXX Warrants") may be exercised
at any time from October 28, 1997 to and including October 28, 2002, provided
that they have vested. The XXXXXXXX Warrants shall vest and become irrevocable
as follows: one third at each purchase price upon the effectiveness of this
agreement, one third on April 28, 1998, and the balance on October 28, 1998.
4. In the event that the Company fails to honor the exercise by XXXXXXXX of any
vested warrants as set forth herein, by failing to deliver the certificate(s)
for the underlying shares of common stock to XXXXXXXX within 10 days after such
exercise, XXXXXXXX may take legal action, without further notice to the Company,
to obtain such underlying shares, and the Company agrees to pay all damages
costs and expenses incurred by XXXXXXXX, including reasonable attorneys' fees.
In addition to any other damages sustained by XXXXXXXX as a result of the
Company's failure to honor such exercise, including any diminution in the value
of the underlying shares over time, the Company agrees that it will pay XXXXXXXX
interest, at the average prime rate based on New York City banking levels for
the prior six months, on the market value of the underlying shares as of the
10th day after the exercise, for the period beginning on the 10th day after the
exercise and ending on the day the certificates for the underlying shares are
received by XXXXXXXX.
5. If SARATOGA should, at any time, or from time to time hereafter, effect a
stock split, a reverse stock split or a recapitalization, the terms of the
XXXXXXXX Warrants shall be proportionately adjusted to prevent the dilution or
enlargement of the rights of the holders.
56. During the period from October 28, 1998 to April 28, 2002, the holders of at
least 51% of: (i) the XXXXXXXX Warrants not then exercised; and (ii) the shares
previously issued upon exercise of any of the XXXXXXXX Warrants (hereinafter,
collectively, the "XXXXXXXX EQUITY") may demand, on one occasion only, that
SARATOGA, at SARATOGA's expense, promptly file a Registration Statement under
the Securities Act of 1933, as amended ("ACT"), to permit a public offering of
the shares of Common Stock issued and issuable pursuant to exercise of the
XXXXXXXX Warrants (the "XXXXXXXX SHARES"). Additionally, if SARATOGA, during the
period from October 28, 1997 to October 28, 2002 files a Registration Statement
covering the sale of any of SARATOGA's common stock, then SARATOGA, on each such
occasion, at the request of the holders of at least 51% of the shares and
warrants constituting the XXXXXXXX EQUITY, shall include in any such
Registration Statement, at SARATOGA's expense, the XXXXXXXX SHARES, provided
that, if the sale of securities by SARATOGA is being made through an underwriter
and the underwriter objects to inclusion of the XXXXXXXX SHARES in the
Registration Statement, the XXXXXXXX SHARES shall not
be so included in the Registration Statement or in any registration statement
filed within 90 days after the effective date of the underwritten Registration
Statement.
7. The obligation of SARATOGA to register the XXXXXXXX SHARES, including the
shares issuable upon exercise of the XXXXXXXX Warrants, pursuant to the demand
or the piggy back registration rights set forth in paragraph 5, above, shall be
without regard to whether the XXXXXXXX Warrants have been or will be exercised.
8. SARATOGA agrees that, per a period of three (3) years from the date of this
AGREEMENT, SARATOGA will not utilize the registration exemption set forth in
Regulation S under the ACT without the consent of XXXXXXXX, which consent will
not be unreasonably withheld. SARATOGA further agrees that SARATOGA will not
issue in excess of 10% per year of SARATOGA's outstanding shares under an S-8.
9. This AGREEMENT constitutes the entire Warrant Agreement between the parties
and when a copy hereof is presented to SARATOGA's transfer agent, together with
a certified check in the proper amount and a request that all or part of the
XXXXXXXX Warrant be exercised, the certificates for the appropriate number of
shares of Common Stock shall be promptly issued.
10. Upon execution of this AGREEMENT, SARATOGA shall include in their next
annual report and filings, the highlights and terms of this investment banking
AGREEMENT.
11. Upon signing of this AGREEMENT, SARATOGA shall pay XXXXXXXX $5,000.00 as a
non-accountable and non-refundable expense allowance for due diligence and
general compliance review. Further, SARATOGA shall pay an additional $20,000 to
XXXXXXXX within 90 days. XXXXXXXX, shall be entitled to additional compensation,
to be negotiated between XXXXXXXX and SARATOGA, arising out of any transactions
that are proposed or executed by XXXXXXXX and consummated by SARATOGA, or are
executed by XXXXXXXX at SARATOGA's request, during the term of this AGREEMENT to
the extent that such compensation is normal and ordinary for such transactions.
In addition, XXXXXXXX shall be reimbursed by SARATOGA for any reasonable
out-of-pocket expenses that XXXXXXXX may incur in connection with rendering any
service to or on behalf of SARATOGA that is approved, in writing, in advance by
SARATOGA's Chief Executive Officer.
12. SARATOGA agrees to indemnify and hold XXXXXXXX and its directors, officers
and employees harmless from and against any and all losses, claims, damages,
liabilities, costs or expenses arising out of any action or cause of action
brought against XXXXXXXX in connection with its rendering services under this
AGREEMENT except for any losses, claims, damages, liabilities, costs or expenses
resulting from any violation by XXXXXXXX of applicable laws and regulations
including, without limitation, those of the National Association of Securities
Dealers, Inc. and the Securities and Exchange Commission or any state securities
commission or
from any act of XXXXXXXX involving willful misconduct and except that SARATOGA
shall not be liable for any amount paid in settlement of any claim that is
settled without its prior written consent.
13. XXXXXXXX agrees to indemnify and hold SARATOGA and its directors, officers
and employees harmless from and against any and all losses claims, damages,
liabilities, costs or expenses resulting from any violation by XXXXXXXX of
applicable laws and regulations including, without limitation, those of the
National Association of Securities Dealers, Inc., the Securities and Exchange
Commission, any state securities commission or from any act of XXXXXXXX
involving willful misconduct.
14. Within 90 days of the date of this AGREEMENT, a representative of XXXXXXXX
will visit the corporate headquarters of SARATOGA. SARATOGA will submit to
XXXXXXXX a current business plan setting forth how SARATOGA plans to proceed
over the next two (2) years.
15. Nothing contained in this AGREEMENT shall be construed to constitute
XXXXXXXX as a partner, employee or agent of SARATOGA, nor shall either party
have any authority to bind the other in any respect, it being intended that
XXXXXXXX is, and shall remain an independent contractor.
16. This AGREEMENT may not be assigned by either party hereto, shall be
interpreted in accordance with the laws of the State of New Jersey, and shall be
binding upon the successors of the parties. Either party may terminate this
investment banking contract at any time, however, legally vested Warrants will
remain with XXXXXXXX.
17. If any paragraph, sentence, clause or phrase of this AGREEMENT is for any
reason declared to be illegal, invalid, unconstitutional, void or unenforceable,
all other paragraphs, sentences, clauses or phrases hereof not so held shall be
and remain in full force and effect.
18. None of the terms of this AGREEMENT shall be deemed to be waived or modified
except by an express agreement in writing signed by the party against whom
enforcement of such waiver or modification is sought. The failure of either
party at any time to require performance by the other party of any provision
hereof shall, in no way, affect the full right to require such performance at
any time thereafter. Nor shall the waiver by either party of a breach of any
provision hereof be taken or held to be a waiver of any succeeding breach of
such provision or as a waiver of the provision itself.
19. Any dispute, claim or controversy arising out of or relating to this
AGREEMENT, or the breach thereof, shall be settled by arbitration in Jersey
City, New Jersey, in accordance with
the Commercial Arbitration Rules of the American Arbitration Association. The
parties hereto agree that they will abide by and perform any award rendered by
the arbitrator(s) and that judgment upon any such award may be entered in any
Court, state or federal, having jurisdiction over the party against whom the
judgment is being entered. Any arbitration demand, summons, complaint, other
process, notice of motion or other application to an arbitration panel, Court or
Judge, and any arbitration award or judgment may be served upon any party hereto
by registered or certified mail, or by personal service, provided a reasonable
time for appearance or answer is allowed.
20. For purposes of compliance with laws pertaining to potential inside
information being distributed unauthorized to anyone, all communications
regarding SARATOGA's confidential information should only be directed to Xxxxxx
X. Xxxxxxxx, Chairman, Xxxxxxx Xxxxxxxxx, President or Xxxxxx Xxxxxxx, Vice
President, Compliance. If information is being faxed, XXXXXXXX'x confidential
compliance fax number is (000) 000-0000 for communication use.
IN WITNESS WHEREOF, the parties hereto have executed this AGREEMENT as of
the day and year set forth above.
X.X. Xxxxxxxx & Co., Inc. Saratoga Brands Inc.
By: By:
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Xxxxxxx Xxxxxxxxx Xxxxx X. Xxxxxxxx
President Chairman of the Board
