EXHIBIT 10.9
OHS Draft
3/6/97
FINANCIAL ADVISORY AND CONSULTING AGREEMENT
This Agreement is made and entered into as of this____day of
___________, 1997 [the effective date of the Registration Statement], by and
between ASD Group, Inc., a Delaware corporation (the "Company"), and X.X. Xxxxxx
& Co., Inc. and Xxxxx Securities Co., Inc. (collectively, the "Consultants").
In consideration of and for the mutual promises and covenants
contained herein, and for other good and valuable consideration, the receipt of
which is hereby acknowledged, the parties hereto hereby agree as follows:
1. PURPOSE. The Company hereby retains the Consultants during
the term specified in SECTION 2 hereof to render consulting advice to the
Company as an investment banker relating to financial and similar matters, upon
the terms and conditions as set forth herein.
2. TERM. Subject to the provisions of SECTION 8, 9 and 10
hereof, this Agreement shall be effective for a period of twelve (12) months
commencing __________, 1997 [the effective date of the Registration Statement].
3. DUTIES OF CONSULTANT. During the term of this Agreement,
the Consultants will provide the Company with such regular and customary
consulting advice as is reasonably requested by the Company, provided that the
Consultants shall not be required to undertake duties not reasonably within the
scope of the consulting advisory service contemplated by this Agreement. In
performance of these duties, the Consultants shall provide the Company with the
benefits of their best judgment and efforts. It is understood and acknowledged
by the parties that the value of the Consultants' advice is not measurable in
any quantitative manner, and that the Consultants shall be obligated to render
advice, upon the request of the Company, in good faith, but shall not be
obligated to spend any specific amount of time in doing so. The Consultants'
duties may include, but will not necessarily be limited to:
A. Providing sponsorship and exposure in connection with the
dissemination of corporate information regarding the Company to the investment
community at large under a systematic planned approach.
B. Rendering advice and assistance in connection with the
preparation of annual and interim reports and press releases.
C. Arranging, on behalf of the Company and its
representatives, at appropriate times, meetings with securities analysts of
major regional investment banking firms.
D. Assisting in the Company's financial public relations,
including discussions between the Company and the financial community.
E. Rendering advice with regard to internal operations,
including:
(1) advice regarding the formation of corporate goals and
their implementation;
(2) advice regarding the financial structure of the Company
and its future divisions or subsidiaries, if any, or any
programs and projects of such entities;
(3) advice concerning the securing, when necessary and if
possible, of additional financing through banks, insurance
companies and/or other institutions; and
(4) advice regarding corporate organization and personnel.
F. Rendering advice with respect to any acquisition program of
the Company.
G. Rendering advice regarding a future public or private
offering of securities of the Company or of any future subsidiary.
4. RELATIONSHIPS WITH OTHERS. The Company acknowledges that
the Consultants and their respective affiliates are in the business of providing
financial service and consulting advice (of all types contemplated by this
Agreement) to others. Nothing herein contained shall be construed to limit or
restrict the Consultants or their respective affiliates from rendering such
services or advice to others.
5. CONSULTANTS' LIABILITY. In the absence of gross negligence
or willful misconduct on the part of the Consultants or the Consultants' breach
of this Agreement, the Consultants shall not be liable to the Company, or to any
officer, director, employee, shareholder or creditor of the Company, for any act
or omission in the course of or in connection with the rendering or providing of
advice or services hereunder. Except in those cases where the gross negligence
or misconduct of the Consultants or the breach by the Consultants of this
Agreement is alleged and proven, the Company agrees to defend, indemnify and
hold the Consultants harmless from and against any and all reasonable costs,
expenses and liability (including, but not limited to, attorneys' fees paid in
the defense of the Consultants) which may in any way result from services
rendered by the Consultants pursuant to or in any connection with this
Agreement.
6. EXPENSES. The Company, upon receipt of appropriate
supporting documentation, shall reimburse the Consultants for any and all
reasonable out-of-pocket expenses incurred by the Consultants in connection with
services rendered by the Consultants to the Company pursuant to this Agreement,
including, but not limited to, hotel, food and associated expenses, all charges
for travel and long-distance telephone calls and all other expenses incurred by
the Consultants in connection with services rendered by the Consultants
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to the Company pursuant to this Agreement. Expenses payable under this SECTION 6
shall not include allocable overhead expenses of the Consultants, including, but
not limited to, attorneys' fees, secretarial charges and rent.
7. COMPENSATION. As compensation for the services to be
rendered by the Consultants to the Company pursuant to SECTION 3 hereof during
the term set forth in SECTION 2 hereof, the Company shall pay the Consultants a
financial consulting fee of six thousand dollars ($6,000) per month, all of
which (an aggregate of seventy-two thousand dollars ($72,000)) shall be paid by
the Company on _____________, 1997 [the closing date of the initial public
offering].
8. OTHER ADVICE. ln addition to the duties set out in SECTION
3 hereof, the Consultants agree to furnish advice to the Company in connection
with the acquisition of and/or merger with other companies, joint ventures with
any third parties, license and royalty agreements and any other financing (other
than the private or public sale of the Company's securities for cash),
including, but not limited to, the sale of the Company itself (or any
significant percentage, subsidiaries or affiliates thereof).
In the event that any such transactions (the "Transaction")
are directly or indirectly originated by the Consultants for a period of
twenty-four (24) months from the date hereof, the Company shall pay fees to the
Consultants as follows:
LEGAL CONSIDERATION FEE
------------------- ---
$-0- - $3,000,000 7% of legal consideration
$3,000,000 - $5,000,000 5% of excess over $4,000,000
over $5,000,000 3% of excess over $5,000,000
Legal Consideration is defined, for purposes of this
Agreement, as the total of stock (valued at market on the day of closing, or if
there is no public market, valued at fair market value as agreed or, if not, by
an independent appraiser), cash and assets and property or other benefits
exchanged by the Company or received by the Company or its shareholders (all
valued at fair market value as agreed or, if not, by an independent appraiser),
irrespective of period of payment or terms. The value of any such securities
(whether debt or equity) or other property shall be determined as follows: (1)
the value of securities that are freely tradeable in an established public
market shall be the last closing market price of such securities prior to the
public announcement of the Transaction; and (2) the value of securities which
are not freely tradeable or which have no established public market, or if the
consideration consists of property other than securities, the value of such
securities or other property shall be the fair market value thereof as mutually
agreed by the Company and the Consultants. Consideration shall also be deemed to
include any indebtedness, including, without limitation, pension liabilities,
guarantees and other obligations assumed, directly or indirectly, in connection
with, or which survives the closing of, a Transaction. If the consideration to
be paid is computed or payable in any foreign currency, the value of such
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foreign currency shall, for the purposes hereof, be converted into U.S. dollars
at the prevailing exchange rate on the dates on which such consideration is
payable.
9. SALES OR DISTRIBUTIONS OF SECURITIES. If the Consultants
assist the Company in the sale or distribution of securities to the public or in
a private transaction, the Consultants shall receive fees in the amount and form
to be arranged separately at the time of such transaction.
10. FORM OF PAYMENT. All fees due to the Consultants pursuant
to SECTION 8 hereof are due and payable to the Consultants, in cash or by
certified check, at the closing or closings of any transaction specified in such
SECTION 8 or as otherwise shall mutually be agreed between the parties hereto;
PROVIDED, HOWEVER, that in the case of license and royalty agreements specified
in SECTION 8 hereof, the fees due the Consultants in respect of such license and
royalty agreements shall be paid as and when license and/or royalty payments are
received by the Company. In the event that this Agreement shall not be renewed
for a period of at least twelve (12) months at the end of the twenty-four (24)
month period referred to in SECTION 8 hereof or if terminated for any reason
prior to the end of such twenty-four (24) month period, then, notwithstanding
any such non-renewal or termination, the Consultants shall be entitled to the
full fee for any transaction contemplated under SECTION 8 hereof which closes
within twelve (12) months after such non-renewal or termination.
11. LIMITATION UPON THE USE OF ADVICE AND SERVICES.
(a) No person or entity, other than the Company or any of its
subsidiaries, shall be entitled to make use of or rely upon the advice of the
Consultants to be given hereunder, and the Company shall not transmit such
advice to others, or encourage or facilitate the use or reliance upon such
advice by others, without the prior consent of the Consultants.
(b) It is clearly understood that the Consultants make no
commitments whatsoever to make a market in the securities of the Company or to
recommend or advise their clients to purchase the securities of the Company.
Research reports or corporate finance reports that may be prepared by the
Consultants will, when and if prepared, be done solely on the merits or judgment
of analysts of the Consultants or senior corporate finance personnel of the
Consultants.
(c) The use of the Consultants' name in any annual report or
other report of the Company, or any release or similar document prepared by or
on behalf of the Company, must have the prior approval of the Consultants unless
the Company is required by law to include either of the Consultant's names in
such annual report, other report or release, in which event the Consultants will
be furnished with a copy of such annual report, other report or release using
either of the Consultants' names in advance of publication by or on behalf of
the Company.
(d) Should any purchases of securities be requested to be
effected through the Consultants by the Company, its officers, directors,
employees or other affiliates, or by any person on behalf of any profit sharing,
pension or similar plan of the Company, for the
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account of the Company or the individuals or entities involved, such orders
shall be taken by a registered account executive of either of the Consultants,
shall not be subject to the terms of this Agreement, and the normal brokerage
commission as charged by the Consultants will apply in conformity with all rules
and regulations of the New York Stock Exchange, the National Association of
Securities Dealers, Inc. or other regulatory bodies. Where no regulatory body
sets the fee, the normal established fee as used by the Consultants shall apply.
(e) The Consultants shall not disclose confidential
information which it learns about the Company as a result of its engagement
hereunder, except for such disclosure as may be required for the Consultants to
perform their duties hereunder.
12. INDEMNIFICATION. Since the Consultants will be acting on
behalf of the Company in connection with its engagement hereunder, the Company
and Consultants have entered into a separate indemnification agreement
substantially in the form attached hereto as EXHIBIT A and dated the date
hereof, providing for the indemnification of the Consultants by the Company. The
Consultants have entered into this Agreement in reliance on the indemnities set
forth in such indemnification agreement.
13. SEVERABILITY. Every provision of this Agreement is
intended to be severable. If any term or provision hereof is deemed unlawful or
invalid for any reason whatsoever, such unlawfulness or invalidity shall not
affect the validity of the remainder of this Agreement.
14. MISCELLANEOUS.
(a) Any notice or other communication between the parties
hereto shall be sent by certified or registered mail, postage prepaid, if to the
Company, addressed to it at ASD Group, Inc., 0 Xxxxxxxx Xxxxxx, Xxxxxxxxxxxx,
Xxx Xxxx 00000, Attention: Xxxx X. Xxxxx, Chairman, with a copy to Broad and
Xxxxxx, 000 Xxxxx Xxxxxxxx Xxxx., Xxxxx 0000, Xxxxx, Xxxxxxx 00000, Attention:
Xxxx X. Xxxxxxx, P.A. or, if to the Consultants, addressed to them x/x X.X.
Xxxxxx & Co., Inc., 0000 Xx. Xxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxx 00000, Attention:
Xxxxxxx X. Xxxxxxx, Managing Director, with a copy to Xxxxxx, Xxxxxxxxxx &
Xxxxxxxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxxxx
X. Xxxxxx, Esq., or to such address as may hereafter be designated in writing by
any of such entities to the others. Such notice or other communication shall be
deemed to be given on the date of receipt.
(b) If, during the term hereof, either of the Consultants
shall cease to do business, the provisions hereof relating to the duties of the
Consultants and the compensation by the Company as it applies to the Consultants
shall thereupon cease to be in effect, except for the Company's obligation of
payment for services rendered prior thereto. This Agreement shall survive any
merger of, acquisition of, or acquisition by the Consultants and, after any such
merger or acquisition, shall be binding upon the Company and the corporation
surviving such merger or acquisition.
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(c) This Agreement embodies the entire agreement and
understanding between the Company and the Consultants and supersedes any and all
negotiations, prior discussions and preliminary and prior agreements and
understandings related to the central subject matter hereof.
(d) This Agreement has been duly authorized, executed and
delivered by and on behalf of the Company and the Consultants.
(e) This Agreement shall be construed and interpreted in
accordance with the laws of the State of New York, without giving effect to
conflicts of laws rules or principals.
(f) This Agreement and the rights hereunder may not be
assigned by either party (except by operation of law) and shall be binding upon
and inure to the benefit of the Parties and their respective successors, assigns
and legal representatives.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date hereof.
ASD GROUP, INC.
By:
--------------------------------
Name:
Title:
X.X. XXXXXX & CO., INC.
By:
--------------------------------
Name:
Title:
XXXXX SECURITIES CO., INC.
By:
--------------------------------
Name:
Title:
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EXHIBIT A
__________________, 1997
X.X. XXXXXX & CO., INC.
0000 Xx. Xxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
XXXXX SECURITIES CO., INC.
00 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
In connection with our engagement of X.X. Xxxxxx & Co., Inc.
and Xxxxx Securities Co., Inc. (collectively, the "Consultants") as our
financial advisors and investment bankers, we hereby agree to indemnify and hold
the Consultants and their respective affiliates, and the directors, officers,
partners, shareholders, agents and employees of the Consultants (collectively
the "Indemnified Persons"), harmless from and against any and all claims,
actions, suits, proceedings (including those of shareholders), damages,
liabilities and expenses incurred by any of them (including, but not limited to,
fees and expenses of counsel) which are (A) related to or arise out of (i) any
actions taken or omitted to be taken (including any untrue statements made or
any statements omitted to be made) by us, or (ii) any actions taken or omitted
to be taken by any Indemnified Person in connection with our engagement of the
Consultants pursuant to the Financial Advisory and Consulting Agreement, of even
date herewith, between the Consultants and us (the "Consulting Agreement"), or
(B) otherwise related to or arise out of the Consultants' activities on our
behalf pursuant to the Consultants' engagement under the Consulting Agreement,
and we shall reimburse any Indemnified Person for all expenses (including, but
not limited to, fees and expenses of counsel) incurred by such Indemnified
Person in connection with investigating, preparing or defending any such claim,
action, suit or proceeding (collectively a "Claim"), whether or not in
connection with pending or threatened litigation in which any Indemnified Person
is a party. We will not, however, be responsible for any Claim which is finally
judicially determined to have resulted exclusively from the gross negligence or
willful misconduct of any person seeking indemnification hereunder. We further
agree that no Indemnified Person shall have any liability to us for or in
connection with the Consultants' engagement under the Consulting Agreement
except for any Claim incurred by us solely as a direct result of any Indemnified
Person's gross negligence or willful misconduct.
We further agree that we will not, without the prior written consent of
the Consultants, settle, compromise or consent to the entry of any judgment in
any pending or threatened Claim in respect of which indemnification may be
sought hereunder (whether or not any Indemnified Person is an actual or
potential party to such Claim), unless such
A-1
settlement, compromise or consent includes a legally binding, unconditional, and
irrevocable release of each Indemnified Person hereunder from any and all
liability arising out of such
Promptly upon receipt by an Indemnified Person of notice of any
complaint or the assertion or institution of any Claim with respect to which
indemnification is being sought hereunder, such Indemnified Person shall notify
us in writing of such complaint or of such assertion or institution, but failure
to so notify us shall not relieve us from any obligation we may have hereunder,
unless, and only to the extent that, such failure results in the forfeiture by
us of substantial rights and defenses, and such failure to so notify us will not
in any event relieve us from any other obligation or liability we may have to
any Indemnified Person otherwise than under this Agreement. If we so elect or
are requested by such Indemnified Person, we will assume the defense of such
Claim, including the employment of counsel reasonably satisfactory to such
Indemnified Person and the payment of the fees and expenses of such counsel. In
the event, however, that such Indemnified Person reasonably determines in its
sole judgment that having common counsel would present such counsel with a
conflict of interest or such Indemnified Person concludes that there may be
legal defenses available to it or other Indemnified Persons that are different
from or in addition to those available to us, then such Indemnified Person may
employ its own separate counsel to represent or defend it in any such Claim and
we shall pay the reasonable fees and expenses of such counsel. Notwithstanding
anything herein to the contrary, if we fail timely or diligently to defend,
contest, or otherwise protect against any Claim, the relevant Indemnified Party
shall have the right, but not the obligation, to defend, contest, compromise,
settle, assert crossclaims or counterclaims, or otherwise protect against the
same, and shall be fully indemnified by us therefor, including, but not limited
to, for the fees and expenses of its counsel and all amounts paid as a result of
such Claim or the compromise or settlement thereof. In any Claim in which we
assume the defense, the Indemnified Person shall have the right to participate
in such defense and to retain its own counsel therefor at its own expense.
We agree that if any indemnity sought by an Indemnified Person
hereunder is held by a court to be unavailable for any reason, then (whether or
not either of the Consultants is the Indemnified Person) we and the Consultants
shall contribute to the Claim for which such Indemnity is held unavailable in
such proportion as is appropriate to reflect the relative benefits to us, on the
one hand, and the Consultants, on the other, in connection with the Consultants'
engagement by us under the Consulting Agreement, subject to the limitation that
in no event shall the amount of the Consultants' contribution to such Claim
exceed the amount of fees actually received by the Consultants from us pursuant
to the Consultants' engagement under the Consulting Agreement. We hereby agree
that the relative benefits to us, on the one hand, and the Consultants, on the
other, with respect to the Consultants' engagement under the Consulting
Agreement shall be deemed to be in the same proportion as (a) the total value
paid or proposed to be paid or received by us or our shareholders as the case
may be, pursuant to the transaction (whether or not consummated) for which the
Consultants are engaged to render services bears to (b) the fee paid or proposed
to be paid to the Consultants in connection with such engagement.
Our indemnity, reimbursement and contribution obligations
under this Agreement shall be in addition to, and shall in no way limit or
otherwise adversely affect any rights that any Indemnified Party may have at law
or at equity.
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Should the Consultants, or any of their respective directors,
officers, partners, shareholders, agents or employees, be required or be
requested by us to provide documentary evidence or testimony in connection with
any proceeding arising from or relating to the Consultants' engagement under the
Consulting Agreement, we agree to pay all reasonable expenses (including, but
not limited to, fees and expenses of counsel) in complying therewith and one
thousand dollars ($1,000) per day for any sworn testimony or preparation
therefor, payable in advance.
We hereby consent to personal jurisdiction and service of
process and venue in any court in which any claim for indemnity is brought by
any Indemnified Person.
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It is understood that, in connection with the Consultants'
engagement under the Consulting Agreement, the Consultants may be engaged to act
in one or more additional capacities and that the terms of the original
engagement or any such additional engagement may be embodied in one or more
separate written agreements. The provisions of this Agreement shall apply to the
original engagement and any such additional engagement and shall remain in full
force and effect following the completion or termination of the Consultants'
engagement(s).
Very truly yours,
ASD GROUP, INC.
By:
-----------------------------
Name:
Title:
CONFIRMED AND AGREED TO:
X.X. XXXXXX & CO., INC.
By:
-----------------------------
Name:
Title:
CONFIRMED AND AGREED TO:
XXXXX SECURITIES CO., INC.
By:
-----------------------------
Name:
Title:
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