{Letterhead}
The Chesapeake Group
Investment and Merchant Banking
An Affiliate of Economic Analysis Group, Ltd.
January 16, 1996
Strictly Private & Confidential
Xx. Xxxxx Xxxxxx
Chief Executive Officer
Metalclad Corporation
0000 Xxxxx Xxxxxx
Xxxxxxx Xxxxx, XX 00000
Dear Xx. Xxxxxx,
This letter ( the Agreement ) outlines the terms under which Chesapeake
Group Inc. ( Chesapeake ) would be engaged to act as financial consultant
to the Metalclad Group of Companies ( Metalclad ) in connection with
transactions involving its Mexican Waste Operations ( Mexico ).
1. Services
Chesapeake shall assist Metalclad in working on its Mexican business
and identifying and designing financial and business structures relating
to transactions involving its Mexican Waste Operation. This engagement
shall relate to any transaction in which Metalclad has any substantive
Mexican relationship including those in which Metalclad is a prospective
or actual buyer, seller, developer, investor, manager, or operator
( Transactions ).
2. Advisory Fees
Metalclad will compensate Chesapeake for the services according to
the following schedule.
A. Fees for services through 1995 $100,000
B. Monthly retainer beginning 1996 $8,000
3. Transaction Fees
In addition to the advisory fee defined in paragraph two above,
Metalclad will compensate Chesapeake for individual Transactions based on
the schedule (Schedule I) to be provided on an ongoing basis and updated
by Metalclad and Chesapeake and attached to this agreement.
4. Termination
Chesapeake s services hereunder may be terminated by either party at
the end of the twenty-fourth month of this agreement without liability or
continuing obligation to Chesapeake or Metalclad, except for any
compensation earned or otherwise to be paid to Chesapeake pursuant to this
Agreement and any expenses incurred by Chesapeake to the date of
termination. The date of termination will be 30 days from the date of a
termination notice being posted. In the event that a termination notice is
not served, it will continue in force on a month-by-month basis
thereafter.
5. Survival
Chesapeake shall have an ongoing interest based on fees earned as
defined in paragraphs 2 and 3 for a period of 24 months following
termination with respect to any transaction identified on Schedule I.
6. Additional Services
If Metalclad requests Chesapeake to perform services not contemplated
by this Agreement or if the terms and conditions of Chesapeake s
assignment change. Chesapeake s compensation will be determined through
negotiations with Metalclad conducted in good faith. Such additional
services will include work to be undertaken by Xxxx Xxxxxxxxx, Xxxxxxx
Xxxx, or other Chesapeake consultants required by Metalclad.
7. Confidentiality
All information learned by Chesapeake pursuant to this engagement
will be treated by its officers, employees and agents as confidential and
such information will only be disclosed to those parties and affiliates
who need to know it and will be used solely for the purposes of
undertaking this engagement.
At the request of Metalclad, Chesapeake undertakes that it will hold
specified information for its exclusive use and that it will not release
such information to any other party without the prior written approval of
the relevant party.
This confidentiality undertaking shall not apply to any part of the
information provided hereunder which is or becomes generally available to
the public without breach of this Agreement. Chesapeake agrees that the
provisions of this section will survive for a period of three years and
remain operative regardless of any termination or completion of its
services hereunder.
8. Indemnification
Metalclad will indemnify Chesapeake and each of their directors,
officers, employees and agents against any and all losses, claims,
liabilities, relating to or arising from the arrangements hereby or
requested pursuant hereto provided that the same shall not have arisen
from negligence or willful default. In addition, no claims will be made
against Chesapeake by Metalclad in respect of any loss or damage which may
be suffered relating to or arising from the arrangements contemplated
hereby or requested pursuant hereto provided that the same shall not have
arisen from negligence or willful default. This paragraph shall survive
any termination of the Agreement and arrangements contained in this
letter. Chesapeake s liability to Metalclad under this Agreement,
including liability for negligence, shall be limited to the amount of any
fees received by it under the Agreement.
Metalclad agrees to reimburse Chesapeake for all reasonable expenses
(including reasonable fees and expenses of Counsel) which are incurred by
it in connection with investigating, preparing or defending any such
action or claim, whether or not in connection with pending or threatened
litigation, in which Chesapeake is a party.
9. Counterparts
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which shall constitute one
and the same instrument.
If you are in agreement with the terms and conditions of this Agreement,
please sign and return an executed copy to Chesapeake.
Yours sincerely,
For and on behalf of Chesapeake
/s/Xxxxxxx X. Land
Xxxxxxx X. Xxxx
Managing Director
Chesapeake Group, Incorporated
I hereby accept the terms set out in this letter.
For an on behalf of Metalclad
/s/Xxxxx Xxxxxx
Xxxxx Xxxxxx
Chief Executive Officer
Metalclad Corporation
Schedule I
Transaction Fees
1. BFI, INTERNATIONAL - In addition to the advisory fee payable to
Chesapeake under the terms of paragraph 2, Metalclad will pay Chesapeake
the following transaction fee relating to the negotiation of a joint
venture with BFI, International.
a. Structuring Fee: $75,000 payable on February 1, 1996;
(Not subject to closing)
Plus
b. Success Fee at Closing: 5% of the value of the transaction
up to $2.5 million and 2.5% of the value thereafter with a minimum cash
fee of $250,000 and a maximum cash fee of $500,000, payable at the closing
of the transaction. The total amount of the Success Fee in excess of
$500,000 shall be payable in stock based on the low bid during the two
weeks prior to closing.
/s/Xxxxx X. Xxxxxx
Agreed on Behalf
of Metalclad
January 16, 1996
