FINANCIAL ADVISORY AND CONSULTING AGREEMENT
This Agreement is made and entered into as of this 14th day of
May, 1997, by and between HAWAIIAN NATURAL WATER COMPANY, INC., a Hawaii
corporation (the "Company"), and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & COMPANY, INC. (the
"Consultant").
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 Consultant 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 SECTIONS 8, 9 and 10
hereof, this Agreement shall be effective for a period of twenty-four (24)
months commencing May 14, 1997.
3. DUTIES OF CONSULTANT. During the term of this Agreement, the
Consultant will provide the Company with such regular and customary
consulting advice as is reasonably requested by the Company, provided that
the Consultant 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 Consultant shall provide the
Company with the benefits of its best judgment and efforts. It is understood
and acknowledged by the parties that the value of the Consultant's advice is
not measurable in any quantitative manner, and that the Consultant 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 Consultant's 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 formation of corporate goals and their
implementation;
(2) advice regarding the financial structure of the Company
and its divisions or subsidiaries 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 subsidiary.
4. RELATIONSHIPS WITH OTHERS. The Company acknowledges that the
Consultant and its affiliates are in the business of providing financial
services and consulting advice (of all types contemplated by this Agreement)
to others. Nothing herein contained shall be construed to limit or restrict
the Consultant or its affiliates from rendering such services or advice to
others.
5. CONSULTANT'S LIABILITY. In the absence of gross negligence or
willful misconduct on the part of the Consultant, or the Consultant's breach
of this Agreement, the Consultant 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 hereunder. Except in those cases where the gross
negligence or willful misconduct of the Consultant or the breach by the
Consultant of this Agreement is alleged and proven, the Company agrees to
defend, indemnify and hold the Consultant 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 Consultant) which may in any way
result from services rendered by the Consultant pursuant to or in any
connection with this Agreement.
6. EXPENSES. The Company, upon receipt of appropriate supporting
documentation, shall reimburse the Consultant for any and all reasonable
out-of-pocket expenses incurred by the Consultant in connection with services
rendered by the Consultant 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 Consultant in connection with services rendered by the
Consultant to the Company pursuant to this Agreement, provided, however, that
the Consultant shall not incur expenses hereunder for which reimbursement is
sought in excess $1,000 without the prior written consent of the Company.
Expenses payable under this Section 6 shall not include allocable overhead
expenses of the Consultant, including, but not limited to, attorneys' fees,
secretarial charges and rent.
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7. [Intentionally omitted].
8. OTHER ADVICE. In addition to the duties set out in SECTION 3
hereof, the Consultant agrees 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 are directly or indirectly
originated by the Consultant for a period of five (5) years from the date
hereof, unless otherwise agreed in writing between the Company and the
Consultant, the Company shall pay fees to the Consultant as follows:
Legal Consideration Fee
------------------- ---
1. $ -0- - $3,000,000 5% of legal consideration
2. $3,000,001 - $4,000,000 Amount calculated pursuant to line 1
of this computation, plus 4% of
excess over $3,000,000
3. $4,000,001 - 5,000,000 Amount calculated pursuant to lines
1 and 2 of this computation, plus 3%
of excess over $4,000,000
4. above $5.000.000 Amount calculated pursuant to lines
1, 2 and 3 of this computation, plus
2% 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 as set forth herein for other property), 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 any independent appraiser), irrespective of period of payment
or terms.
9. SALES OR DISTRIBUTIONS OF SECURITIES. If the Consultant
assists the Company in the sale or distribution of securities to the public
or in a private transaction, the Consultant 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 Consultant pursuant to
SECTION 8 hereof are due and payable to the Consultant, in cash or by
certified check, at the closing or closings of a transaction specified in
such SECTION 8 or as otherwise 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 Consultant in receipt of such license and
royalty agreements shall be
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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 five (5) year period referred to
in SECTION 8 hereof or if terminated for any reason prior to the end of such
five (5) year period then, notwithstanding any such non-renewal or
termination, the Consultant 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
Consultant to be given hereunder, and the Company shall not transmit such
advice to others, or encourage or facilitate the use of or reliance upon such
advice by others, without the prior written consent of the Consultant.
(b) It is clearly understood that the Consultant, for services
rendered under this Agreement, makes no commitment whatsoever as to making a
market in the securities of the Company or to recommend or advise its clients
to purchase the securities of the Company. Research reports or corporate
finance reports that may be prepared by the Consultant will, when and if
prepared, be done solely on the merits or judgment of analysts of the
Consultant or senior corporate finance personnel of the Consultant.
(c) The use of the Consultant's 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 written approval of the Consultant
unless the Company is required by law to include the Consultant's name in
such annual report, other report or release, in which event the Consultant
will be furnished with a copy of such annual report, other report or release
using Consultant's name in advance of publication by or on behalf of the
Company.
(d) Should any purchases of securities be requested to be effected
through the Consultant 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 account of the Company or the
individuals or entities involved, such orders shall be taken by a registered
account executive of the Consultant, shall not be subject to the terms of
this Agreement, and the normal brokerage commission as charged by the
Consultant 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 Consultant shall apply.
(e) The Consultant shall not disclose confidential information
which it learns about the Company as a result of its engagement hereunder,
except as such disclosure as may be required for Consultant to perform its
duties hereunder.
12. INDEMNIFICATION. Since the Consultant will be acting on behalf
of the Company in connection with its engagement hereunder, the Company and
Consultant have entered into a separate indemnification agreement
substantially in the form attached hereto as
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EXHIBIT A and dated the date hereof, providing for the indemnification of
Consultant by the Company. The Consultant has 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 ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇, Chief Executive Officer, with a copy to ▇▇▇▇▇▇ &
▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq., or, if to the Consultant, addressed
to it at ▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Chief Executive Officer, with a copy to ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, Esq., or to such address as may hereafter be designated in
writing by one party to the other. Such notice or other communication shall
be deemed to be given on the date of receipt.
(b) If, during the term hereof, the Consultant shall cease to do
business, the provisions hereof relating to the duties of the Consultant and
compensation by the Company as it applies to the Consultant 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 Consultant and, after any such merger
or acquisition, shall be binding upon the Company and the corporation
surviving such merger or acquisition.
(c) This Agreement embodies the entire agreement and understanding
between the Company and the Consultant 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 Consultant.
(e) This Agreement shall be construed and interpreted in
accordance with laws of the State of New York, without giving effect to
conflicts of laws.
(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,
HAWAIIAN NATURAL WATER COMPANY, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇
Chief Executive Officer
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & COMPANY, INC
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
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EXHIBIT A
May 14, 1997
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & COMPANY, Inc.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
In connection with our engagement of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & COMPANY, INC.
(the "Consultant") as our financial advisor and investment banker, we hereby
agree to indemnify and hold the Consultant and its affiliates, and the
directors, officers, partners, shareholders, agents and employees of the
Consultant (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 Consultant pursuant to the
Financial Advisory and Consulting Agreement, of even date herewith, between
the Consultant and us (the "Consulting Agreement"), or (B) otherwise related
to or arising out of the Consultant's activities on our behalf pursuant to
the Consultant's 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 Consultant's 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 Consultant 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 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 Claim.
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 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 the Consultant is the Indemnified Person) we and the Consultant 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 Consultant, on the other, in connection with the
Consultant's engagement by us under the Consulting Agreement, subject to the
limitation that in no event shall the amount of the Consultant's contribution
to such Claim exceed the amount of fees actually received by the Consultant
from us pursuant to the Consultant's engagement under the Consulting
Agreement. We hereby agree that the relative benefits to us, on the one hand,
and the Consultant, on the other hand, with respect to the Consultant's
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 stockholders as the case may be, pursuant to the transaction
(whether or not consummated) for which the Consultant is engaged to render
services bears to (b) the fee paid or proposed to be paid to the Consultant
in connection with such engagement.
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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 an Indemnified Part may have at
law or at equity.
Should the Consultant, or any of its 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 Consultant's 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.
It is understood that, in connection with the Consultant's
engagement under the Consulting Agreement, the Consultant 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
Consultant's engagement(s).
Very truly yours,
HAWAIIAN NATURAL WATER COMPANY, INC.
By:
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▇▇▇▇▇▇ ▇▇▇▇▇▇
Chief Executive Officer
CONFIRMED AND AGREED TO:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & COMPANY, INC.
By:
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