FINANCIAL ADVISORY AGREEMENT
Exhibit
10.11
THIS
FINANCIAL ADVISORY AGREEMENT (“Agreement”) is made and entered into on the
5th
of
September 2006, by and between HFG International, Limited, a Hong Kong
corporation (“HFG”), and Shenzhen Ritar Power Co., Ltd, a company organized
under the laws of The People’s Republic of China (the “Company”).
W
I T N E
S S E T H:
WHEREAS,
the Company desires to engage HFG to provide certain financial advisory and
consulting services as specifically enumerated below commencing as of the date
hereof related to the Financing, the Restructuring, the Going Public Transaction
and the Post-Transaction Period (each as hereinafter defined), and HFG is
willing to be so engaged;
NOW,
THEREFORE, for and in consideration of the covenants set forth herein and the
mutual benefits to be gained by the parties hereto, and other good and valuable
consideration, the receipt and adequacy of which are now and forever
acknowledged and confessed, the parties hereto hereby agree and intend to be
legally bound as follows:
1. Retention.
As of
the date hereof, the Company hereby retains and HFG hereby agrees to be retained
as the Company’s exclusive
financial advisor during the term of this Agreement. The Company acknowledges
that HFG shall have the right to engage third parties to assist it in its
efforts to satisfy its obligations hereunder. In its capacity as a financial
advisor to the Company, HFG will:
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A.
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Restructuring,
Going Public Transaction and
Financing.
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(i) consult
on the implementation of a restructuring plan (the “Restructuring”) resulting in
an organizational structure that will allow the Company to complete the Going
Public Transaction;
assist
the Company in evaluating the manner of effecting a going public transaction
(a
“Going Public Transaction”) with a public shell corporation domiciled in the
United States of America and quoted on the “OTC BB” (“Pubco”) resulting in HFG,
its affiliates and the minority shareholders of the public shell corporation
retaining control of 9% of all the issued and outstanding stock of Pubco
following consummation of both the Financing and the Going Public Transaction.
The Company acknowledges that it has presented HFG with financial projections
for the 12 month “trailing” period ending September 30, 2006 (the “2005/2006
Projections”) indicating that the Company will report net income, with actual
reported net income for this period being referred to herein as (“2005/2006
ARNI”), of at least $3.5 million USD (the “2005/2006 Projected NI”). If the
Company fails to satisfy the 2005/2006 Projected NI, to be reported to HFG
on or
before November 15, 2006, HFG shall have the right, upon delivery of written
notice to the Company to be delivered in 5 days after the Company reports
2005/2006ARNI to HFG, to terminate this Agreement and the Financing Agreement
attached hereto as Exhibit “A” or renegotiate their respective terms. If it is
HFG’s desire to renegotiate the terms of the Going Public and Financing
Transactions, such negotiations will terminate 15 days after the date the notice
requesting a renegotiation is delivered to the Company, and in the event that
new terms are not agreed upon within said 15 day period this Agreement shall
be
deemed terminated, unless the 15 day period is extended by the Company and
HFG;
and
(ii) assist
the Company in a capital raising transaction (a “Financing”) as permitted by
applicable law and in accordance with the terms of that certain Financing
Agreement (the “Financing Agreement”) attached hereto as Exhibit
“A”.
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B.
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Post
Transaction Period
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Upon
consummation of the Going Public Transaction, HFG agrees to:
(i) coordinate
and supervise a training program for the purpose of facilitating new
management’s operation of the public company;
(ii) if
necessary, consult on the preparation of an information statement to be filed
with the SEC to change Pubco’s name and to in turn assist in obtaining a new
CUSIP number and stock symbol for Pubco;
(iii) consult
on the development and implementation of Pubco’s investor relations efforts,
which shall include (a) a program for communicating with brokerage
professionals, investment bankers and market makers; (b) a complete investor
relations strategy to be implemented in English and Chinese; and (c) the
preparation and dissemination of press releases (the Company agrees that all
costs and expenses charged by investor relations and press relations firms
introduced by HFG and engaged by Pubco will be the sole responsibility of
Pubco);
(iv) provide
assistance and guidance in the preparation and assembly of application materials
for the listing of Pubco’s common stock on a national exchange or quotation
medium that may include, but shall not necessarily be limited to, the American
Stock Exchange or the NASDAQ Stock Market;
(v) act
as
Pubco’s exclusive advisor on all financing efforts for a period of 24 months
following the closing of the Going Public Transaction; and
(vi) provide
Pubco with such additional financial advisory services as may be reasonably
requested, to the extent HFG has the expertise or legal right to render such
services.
2. Authorization.
Subject
to the terms and conditions of this Agreement, the Company hereby appoints
HFG
to act on a best efforts basis as its consultant during the Authorization Period
(as hereinafter defined). HFG hereby accepts such appoint, with it being
expressly acknowledged that HFG is acting in the capacity of independent
contractor and not as an agent of either the Company, affiliates of the Company
resulting from the Restructuring, or Pubco.
In
addition, except in the event of an act constituting either willful misconduct
or gross negligence on the part of HFG, the Company agrees that it will not
hold
HFG responsible in the event that either the Restructuring, the Financing or
the
Going Public Transaction is not consummated, nor shall it hold HFG liable for
any damages suffered by the Company as a result of the Company’s inability to
consummate either the Restructuring, the Financing or the Going Public
Transaction. However, in the event HFG commits an act constituting either
willful misconduct or gross negligence which makes it impossible to complete
either the Financing or the Going Public Transaction, HFG shall indemnify the
Company against all costs, including legal, accounting and other fees and
expenses, arising from the Company’s efforts to complete the Financing and the
Going Public Transaction. It is expressly acknowledged by the Company that
HFG
shall not render legal or accounting advice in connection with the services
to
be provided herein. HFG shall have the right to recommend the legal and
accounting professionals for the transactions contemplated herein.
3. Authorization
Period.
Except
as otherwise provided for herein, HFG’s engagement hereunder shall become
effective on the date hereof (the “Effective Date”) and will automatically
terminate (the “Termination Date”) on the first to occur of either of the
following: (a) either party exercises their right of termination under
Section
5.
hereof,
(b) the Company’s breach of its covenants herein or (c) Pubco’s listing on a
national stock exchange or a quotation medium. This Agreement may be extended
beyond the Termination Date if both parties mutually agree in writing. Except
as
to certain obligations of the Company under Section 4.
hereof,
this Agreement shall also terminate immediately upon the mutual decision of
the
parties not to move forward with the Restructuring, the Financing or the Going
Public Transaction.
4. Fees
and Expenses.
Immediately upon the commencement of HFG’s due diligence investigation of the
Company, the Company shall deliver to HFG via wire transferred funds the
non-refundable amount of US $15,000. Upon completion of the Company’s business
plan, the Company shall deliver to HFG via wire transferred funds the
non-refundable amount of US$15,000. Simultaneous with the closing of the Going
Public Transaction, the Company shall pay to HFG a fee of US $450,000 (the
“Fee”), via wire transferred funds.
In
addition, the Company shall reimburse HFG for all documented travel and lodging
expenses incurred by HFG personnel during the term of this Agreement.
Reimbursement is to be made within 10 days of receipt of a written request
for
reimbursement submitted to the Company.
5. Due
Diligence and Auditabilty.
HFG
shall have the right to perform a due diligence investigation of the Company
that demonstrates to HFG’s sole satisfaction that the Company is a suitable
candidate for the Going Public Transaction, which due diligence investigation
shall include consultation with the Company’s independent audit firm regarding
the auditablity of the Company in accordance with US GAAP. HFG shall have the
right to terminate this Agreement in the event it determines that there exists
a
material and non-curable due diligence matter. The Company shall also have
the
right to perform a due diligence investigation of the public
company.
6. Representations
and Covenants.
The
Company covenants and agrees that it will ensure that simultaneous with the
closing of the Going Public Transaction, Pubco will file a registration
statement on appropriate form with the SEC to register the HFG’s or its
affiliates' holdings in Pubco (the “HFG Shares”) under Section 5 of the
Securities Act of 1933 (the “Act”) for purposes of resale. The registration
statement shall remain current until such time as the HFG Shares may be eligible
for resale under Rule 144(k) of the Act.
7. Indemnification.
The
parties hereto shall indemnify each other to the extent provided for in this
paragraph. Except as a result of an act of gross negligence or willful
misconduct on the part of a party hereto, no party shall be liable to another
party, or its officers, directors, employees, shareholders or affiliates, for
any damages sustained as a result of an act or omission taken or made under
this
Agreement. In those cases where gross negligence or willful misconduct of a
party is alleged and proven, the non-damaged party agrees to defend, indemnify
and hold the damaged party harmless from and against any and all reasonable
costs, expenses and liabilities suffered or sustained as a result of the act
of
gross negligence or willful misconduct
8. Governing
Law.
This
Agreement shall be governed by the laws of the Peoples Republic of China and
any
dispute arising hereunder shall be submitted for binding arbitration to the
China Foreign Trade Commission Arbitration Committee in Shanghai.
It
is
understood that this Agreement will be prepared and executed in both the English
and Chinese languages, with both versions having legal efficacy. If a dispute
arises as to the interpretation of a particular provision of this Agreement
because of differences between the Chinese and English languages, the dispute
shall be resolved in accordance with the provisions of the preceding paragraph
of this Section 8.
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year
first above written.
HFG:
HFG
International, Limited
By:
/s/ Xxxxxxx X.
Xxxxxx
Xxxxxxx
X. Xxxxxx,
Its: Chairman
and CEO
The
Company:
Shenzhen
Ritar Power Co., Ltd
By:
/s/ Hu
Jiada
Name:Hu
Jiada
Its: Chairman
