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EXHIBIT 10.43
ADVISORY SERVICES AGREEMENT
Advisory Services Agreement, effective May 1, 1997, entered into by
and between Intelect Communications Systems Limited (the "Company"), with
offices located at 0000 Xxxxxxxxx Xxxxx, Xxxxxxxxxx, Xxxxx 00000, and
Renaissance Financial Securities Corp., a New York corporation (the
"Consultant"), with offices located at 000 Xxx Xxxxxxx Xxxx, Xxxxx 000,
Xxxxxxx, Xxx Xxxx 00000.
RECITALS
WHEREAS, the Consultant is in the business of providing advisory
services regarding financial markets, investment community relations and
corporate financing activities; and
WHEREAS, the Company wishes to retain Consultant to provide such
services;
NOW THEREFORE, in consideration of the premises and the mutual
covenants of this Agreement hereinafter set forth, the parties hereto covenant
and agree as follows:
1. Purposes. The Company hereby retains the Consultant to act in
an advisory capacity to the Company on the terms and conditions set forth
herein. The parties agree that the Consultant shall be engaged by the Company
as an independent contractor on a consulting basis and not as an employee of
the Company.
2. Term. The Consultant hereby agrees to provide services to the
Company commencing on the date hereto and ending on or about August 31, 1998
unless terminated earlier pursuant to Section 9 hereof. This Agreement can be
extended with the consent of both parties.
3. Duties of Consultant. During the term of this Agreement,
Consultant shall provide the Company with such regular and customary advisory
services as may be reasonably requested by the Company, provided that the
Consultant shall not be required to undertake duties not reasonably within the
scope of the services contemplated by this Agreement. It is understood and
acknowledged by the parties that the value of Consultant's advice is not
readily quantifiable, and that Consultant shall be obligated to render advice
upon the request of the Company, in good faith, but shall not be obligated to
spend a pre-designated amount of time in so doing and the Company shall not be
obligated to request or utilize such advice. Consultant's duties will include,
but will not necessarily be limited to, providing recommendations concerning
one or more of the following matters:
A. Assisting in the Company's investor relations;
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B. Assisting in the Company's financial public relations;
C. Assisting the Company in distribution of its public
information disclosures;
D. Assisting the Company in communicating with the broker/dealer
and investment banking communities, increasing the awareness
of the Company among institutional investors, business
analysts, money managers, retail stockbrokers, market makers
and security research analysts;
E. Assisting the Company in obtaining financial media coverage,
i.e., Wall Street Journal, NY Times, Business Week, Forbes,
technology publications;
F. Providing or arranging for written research reports with
respect to the Company; and
G. Assisting the Company in the soliciting of proxies for matters
voted upon by the Company's shareholders at General or Special
Meetings of shareholders.
4. Consultant and Company acknowledge that from time to time the
Company may need, and the Consultant may be in a position to provide, certain
transactional services such as locating a successful acquisition or merger
candidate or locating and raising private placement funding. The parties agree
that any such services shall be performed, and the payment for such services
shall be made, on a transaction-by-transaction basis pursuant to the terms of a
separate written agreement to be entered into by the parties. The parties do
agree, however, that in the event the parties do enter into such a separate
written agreement, such written agreement shall provide for compensation of
Consultant in substantially the following manner:
A. If the Consultant exclusively locates and presents the Company
with an acquisition and/or merger candidate that results in
the successful closing of such acquisition and/or merger, then
the Company shall pay the Consultant a finders fee at such
closing. This finders fee shall be paid in shares of the
Company's common stock (as listed on NASDAQ) in an amount
based on the Xxxxxx formula (such shares being referred to
herein as the "Finders Fee Shares"). The value of the
transaction for which a finders fee shall be payable to
Consultant based on the Xxxxxx formula, whether in connection
with a merger, acquisition and/or consolidation shall be the
consideration paid or received by the Company or its
shareholders as the case may be, or if such determination
cannot be readily ascertained then the value shall be that of
the transaction taken in its entirety. In the event of any
dispute as to the value of the transaction or the calculation
of the finders fee, the Consultant and the Company shall have
the right to mutually select a qualified third party to
determine such valuation and/or finders fee, which
determination shall be final and binding. The expenses of
such third party shall be shared equally between the parties.
The
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number of shares issuable to Consultant shall then be
determined by dividing the finders fee by the closing bid
price of the shares of the Company's common stock on NASDAQ on
the date of the closing of the merger or acquisition. If, at
any time during the period in which the Consultant owns the
Finder Fee Shares, the Company proposes to file a registration
statement or notification under the Securities Act for the
primary or secondary sale of any debt or equity security, it
will give written notice at least 30 days prior to the filing
of such registration statement or notification to the
Consultant of its intention to do so. The Company agrees
that, after receiving written notice from the Consultant of
its desire to include its Finder Fee Shares in such proposed
registration statement or notification, the Company shall
afford the Consultant the opportunity to have its Finder Fee
Shares included therein. Notwithstanding the provisions of
this paragraph, the Company shall have the right, at any time
after it shall have given written notice pursuant to this
paragraph (whether or not a written request for inclusion of
the Finder Fee Shares shall be made) to elect not to file any
such proposed registration statement or notification or to
withdraw the same after the filing but prior to the effective
date thereof. If the Company does not file a registration
statement within twelve (12) months from the date of issuance
of the Finders Fee Shares then the Consultant shall have the
right on one occasion only to demand that the Company file, at
the Company's expense, a registration for the Consultant's
Finders Fee Shares. In no event shall the Company be
obligated to include the Finder Fee Shares in any registration
statement under this paragraph if: (i) in the written opinion
of the Company's underwriter, the inclusion of the Finder Fee
Shares in such registration statement or notification would be
materially detrimental to the proposed offering of debt or
equity securities pursuant to which the Company gave notice to
the holders under this paragraph; (ii) year end audited
financial statements of a date within one-hundred twenty days
of the filing of the registration statement are not available;
or (iii) in the opinion of counsel for the Company that the
Finder Fee Shares are not considered "restricted securities"
within the meaning of Rule 144 promulgated under the
Securities Act and that registration under the Securities Act
is therefore not required.
If the Consultant is responsible for raising private placement
or debt funds, it will be entitled to a 10% fee in cash or in
common stock, at its election. If the Consultant raises money
with the assistance from another broker/dealer or source then
the Consultant and the Company will negotiate an additional
finders fee above the 10% fee but no greater than an
additional 3% fee.
5. Compensation. In consideration for the advisory services
pursuant to this Agreement by Consultant for the Company, the Company shall pay
to AJC, Inc., as assignee of Consultant, the warrants described in this Section
5. Consultant agrees and acknowledges
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that because of its affiliation with AJC, Inc., Consultant is receiving a
financial benefit from the warrants being issued to AJC, Inc., and Consultant
acknowledges the receipt and sufficiency of the consideration being paid for
its advisory services hereunder. Accordingly, the Company shall issue warrants
as follows:
A. 100,000 warrants to purchase the common stock of the Company
at $3.00 per share;
B. 100,000 warrants to purchase the of common stock of the
Company at $5.00 per share; and
C. 100,000 warrants to purchase the common stock of the Company
at $7.00 per share.
Such warrants are being issued pursuant to the Warrant Agreement
attached hereto as Exhibit "A" attached hereto and incorporated herein by
reference.
6. Expenses. The Company will promptly reimburse Consultant for
all pre-approved out-of-pocket expenses properly incurred by it in its
performance of this Agreement provided that a written accounting is made to the
Company by the Consultant. Such expenses shall include, but not be limited to,
travel expenses, printing costs and postage for bulk mailings of research
reports.
7. Further Agreements. Because of the nature of the services
being provided by Consultant hereunder, Consultant acknowledges that it may
receive access to Confidential Information (as defined in Section 8 hereof) and
that, as a consultant to the Company, it will attempt to provide advice that
serves the best interests of the Company. Because of the uniqueness of this
relationship, the Consultant covenants and agrees that, with respect to the
shares of common stock of the Company that it acquires upon the exercise of the
warrants granted to it in Section 5(a) and (b) hereof, Consultant shall, at all
times that it is the beneficial owner of such shares, vote such shares on all
matters coming before it as a stockholder of the Company in the same manner as
the majority of the Board of Directors of the Company shall recommend.
8. Confidentiality. Consultant acknowledges that as a
consequence of its relationship with the Company, it may be given access to
confidential information which may include the following types of information:
financial statements and related financial information with respect to the
Company and its subsidiaries (the "Confidential Financial Information"), trade
secrets, products, product development, product packaging, future marketing
materials, business plans, certain methods of operation, procedures,
improvements, systems, customer lists, supplier lists and specifications, and
other private and confidential materials concerning the Company's business
(collectively, "Confidential Information").
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Consultant covenants and agrees to hold such Confidential Information
strictly confidential and shall only use such information solely to perform its
duties under this Agreement, and Consultant shall refrain from allowing such
information to be used in any way for its own private or commercial purposes.
Consultant shall also refrain from disclosing any such Confidential Information
to any third parties and will disclose such Confidential Information only to
employees of Consultant who need to know in furtherance of performing the
obligations of Consultant hereunder. Consultant further agrees that upon
termination or expiration of this Agreement, it will return all Confidential
Information and copies thereof to the Company and will destroy all notes,
reports and other material prepared by or for it containing Confidential
Information. Consultant understands and agrees that the Company might be
irreparably harmed by violation of this Agreement and that monetary damages may
be inadequate to compensate the Company. Accordingly, the Consultant agrees
that, in addition to any other remedies available to it at law or in equity,
the Company shall be entitled to injunctive relief to enforce the terms of this
Agreement.
Notwithstanding the foregoing, nothing herein shall be construed as
prohibiting Consultant from disclosing any Confidential Information (a) which
at the time of disclosure, Consultant can demonstrate either was in the public
domain and generally available to the public or thereafter becomes a part of
the public domain and is generally available to the public by publication or
otherwise through no act of the Consultant; (b) which Consultant can establish
was independently developed by a third party who developed it without the use
of the Confidential Information and who did not acquire it directly or
indirectly from Consultant under an obligation of confidence; (c) which
Consultant can show was received by it after the termination of this Agreement
from a third party who did not acquire it directly or indirectly from the
Company under an obligation of confidence; or (d) to the extent that the
Consultant can reasonably demonstrate such disclosure is required by law or in
any legal proceeding, governmental investigation, or other similar proceeding.
9. Termination.
A. This Agreement shall terminate upon:
(i) Expiration of the term of this Agreement; or
(ii) Consultant's voluntary resignation to be effective
upon thirty (30) days prior written notice to the
Company; or
(iii) The Company's election, in its sole discretion, even
without "cause" (as such term is defined in Section
9(B) below), upon five (5) days written notice to
Consultant. It is agreed by the Company and
Consultant that the Company may terminate this
Agreement at any time for any reason
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without cause, and in such event, Consultant shall
not be entitled to provide any further services to
the Company under this Agreement and Consultant shall
be entitled only to receive the compensation
described in Section 5 hereof and reimbursement for
any expenses approved pursuant to Section 6 hereof
accrued through the date of termination.
B. This Agreement may be terminated by the Company "for cause",
meaning Consultant's gross default or refusal to provide the
services contemplated in Section 3 hereof; provided, however,
the Company shall notify Consultant in writing of its
intention to terminate this Agreement "for cause" and
Consultant shall have the right to cure such default within
thirty (30) days of receipt of such written notice. If
Consultant has not cured such default within the period
specified above, then this Agreement shall terminate as of the
date of expiration of such thirty (30) day period, and
Consultant shall only be entitled to that amount of accrued
compensation and reimbursement of expenses as described in
Sections 5 and 6 hereof which is accrued through such date of
termination.
10. Opinion of Counsel. Consultant has delivered to the Company
that certain opinion of counsel from Xxxxx X.X. Xxxxx attached hereto as
Exhibit "B" and incorporated herein by reference.
11. No Waiver. The failure of any party to insist upon the strict
performance of any of the terms, conditions or provisions of this Agreement
shall not be construed as a waiver or relinquishment of future compliance
therewith, and said terms, conditions and provisions shall remain in full force
and effect. No interpretation, changes, modifications, terminations or waivers
of any of the provisions of this Agreement shall be binding upon the Company or
Consultant unless in writing and signed by the person to be bound.
12. Rights, Obligations and Assignment. The rights and
obligations of the Company and the Consultant under this Agreement shall inure
to the benefit of, and shall be binding upon, the successors and assigns of
each, as the case may be. An assignment by either party hereto may be made if
the Company or the Consultant shall at any time be merged into or consolidated
with any other corporation, or if substantially all of the assets of the
Company, including its business and good will, are transferred to another
corporation, association, individual or partnership. Except as specifically
provided herein, neither party shall make any assignment without the written
consent of the other party. The provisions of this Agreement shall be binding
upon and insure to the benefit of the corporation resulting from such merger or
consolidation, or the transferee to which such assets shall be transferred.
This paragraph shall also apply in the event of any subsequent merger,
consolidation or transfer. The duties of Consultant to any such successor
entity shall not be greater than duties performed for the Company prior to such
succession.
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13. Entire Agreement. This Agreement embodies the entire
understanding between the parties hereto pertaining to the subject matter
hereof and supersedes all prior agreements and understandings of the parties in
connection therewith.
14. Severability. If any of the provisions of this Agreement
shall for any reason be adjudged by any court of competent jurisdiction to be
invalid or unenforceable, such judgment shall not affect, impair or invalidate
the remainder of this Agreement, but shall be confined in its operation to the
provisions of this Agreement directly involved in the controversy in which such
judgment shall have been rendered.
15. Notices. Notices, other communications or deliveries required
or permitted under this Agreement shall be in writing directed as follows:
A. To the Company at:
Intelect Communications Systems Limited
0000 Xxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx
Title: Chairman and Chief Executive Officer
With copy to:
Xxxxxx X. Sudan, Jr.
Xxxx & Sudan, LLP
000 Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
B. To Consultant:
Renaissance Financial Securities Corp.
000 Xxx Xxxxxxx Xxxx, Xxxxx #000
Xxxxxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxx
Title: President
The parties may designate by notice to each other any new address for
the purpose of this Agreement. Unless otherwise specified in this Agreement,
all notices shall be effective when mailed postage prepaid by registered or
certified mail, return receipt requested.
16. Applicable Law. This Agreement shall be construed and
enforced in accordance with the internal substantive laws of the State of
Texas, as from time to time constituted and regard to the conflicts of laws
principles thereof.
17. Headings. The captions and headings contained in this
Agreement are for
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reference purposes only and shall not affect the interpretation or meaning of
this Agreement.
18. Counterparts. This Agreement may be executed in several
counterparts, each of which when so executed shall be deemed to be an original
and such counterparts together shall constitute one and the same instrument and
all parties agree that the reproduction of signatures by way of telecopying
device will be treated as though such reproductions were executed originals,
and each party under-takes to provide the others with an original (bearing
original signatures) as soon as reasonably practicable.
IN WITNESS WHEREOF, the parties have executed this Consulting
Agreement as of the date and year first above written.
Intelect Communications Systems Limited
Date: 7-7-97 By: /s/ XXXXXX X. XXXXXXXX
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Name: Xxxxxx X. Xxxxxxxx
Title Chairman and Chief
Executive Officer
Renaissance Financial Securities Corp.
Date: 7-3-97 By: /s/ XXXX X. XXXXXXX
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Name: Xxxx X. Xxxxxxx
Title: President
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