JFR
Xx. Xxxx X. Xxxxxxxx, Xx.
0000 Xxxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
EXCLUSIVE CONSULTING AGREEMENT
THIS EXCLUSIVE CONSULTING AGREEMENT (this "Agreement") is made and entered
into at Richardson, Texas this 3nd day of August, 2007, by and between Xx. Xxxx
X. Xxxxxxxx, Xx., whose primary business address is 0000 Xxxxxxxxx Xxxx, Xxxxx
000, Xxxxxxxxxx, Xxxxx 00000 (hereinafter referred to as the "Consultant") and
Tarpon Industries, Inc., a Michigan corporation whose primary business address
is 0000 Xxxxx Xxxxxx, Xxxxxxxxxx, XX 00000 (hereinafter referred to as the
"Company").
W I T N E S S E T H:
WHEREAS, Consultant is in the business of providing consulting and
financial advisory services with regard to debt and asset management, claims
resolution, capital restructuring and cash flows analysis; and
WHEREAS, the Company desires to retain the services of the Consultant on
the terms and conditions provided in this Agreement; and
WHEREAS, Consultant, understanding and accepting the terms and conditions
set forth herein, desires to render such services on such terms and conditions.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the parties
mutually agree as follows:
1. Engagement.
(a) The Company hereby retains Consultant as the Company's exclusive
Consultant for the Services (hereinafter defined) and Consultant agrees to act
as a consultant and provide the Services to the Company. The Company will make
available to Consultant all books and records regarding certain claims of
creditors (the "Creditors Claims") and the confirmed debt of each Creditor Claim
("Confirmed Debt") for which the Company desires Consultant's Services.
Consultant, personally and through delegation to such persons as he deems
appropriate, will provide financial services and advice concerning the Creditors
Claims, the Confirmed Debt and the Company's capital structure, cash flows and
asset and debt management techniques (the "Services"). The Services shall
commence upon receipt by the Consultant of the Consulting Fee.
(b) Nothing herein shall be construed to create an employer-employee
relationship between the Company and Consultant. Consultant is an independent
contractor and not an employee of the Company or any of its subsidiaries or
affiliates. The consideration set forth in Section 2 shall be the sole
consideration due Consultant for the Services rendered hereunder. It is
understood that the Company will not withhold any amounts for payment of taxes
from the compensation of Consultant hereunder and Consultant will hold the
Company harmless from the same. Consultant will not represent to be or hold
himself out as an employee of the Company.
(c) All information concerning the Creditor Claims and Confirmed Debt and
all work product created or produced by Consultant in connection with the
provision of the Services hereunder shall be the sole and exclusive property of
the Company. Subject to the confidentiality obligations of the parties, the
Company agrees that Consultant shall have a limited, nontransferable and royalty
free license to use all such information provided to, and work product created
hereunder; however, the parties agree that all business methods, know how,
investor lists, negotiation strategies, business plans and related processes
used by Consultant in the performance of the Services hereunder are the
confidential and proprietary information of Consultant, shall remain the sole
and exclusive property of Consultant, and that no license thereto is provided to
the Company by virtue of Consultant entering into this Agreement.
(d) In connection with Consultant's due diligence investigation, the
Company will provide Consultant full and complete access to Company's books and
records, agreements, papers and records, including reasonable access to
Company's independent auditors, attorneys, financial advisors or other outside
professionals, relating to the financial condition, capital structure, ownership
interests and operation of the Company (including customers, vendors and
suppliers) as may be reasonably requested by Consultant.
(e) Consultant has not been engaged to perform, nor will Consultant agree
to perform any Services: (i) in connection with any capital-raising
transactions, or (ii) which directly or indirectly promote or maintain a market
in the Company's securities. Consultant will on a regular basis consult with and
keep the Company informed as to Consultant's activities hereunder.
2. Consulting Fees.
(a) In consideration for the Services, the Company shall pay to Consultant
eight million (8,000,000) shares of common stock of the Company registered on
Form S-8 (the "Shares") filed with the Securities and Exchange Commission (the
"SEC") (the "Consulting Fee"). The Consulting Fee shall be paid in one lump sum.
The Consulting Fee will be paid on the last to occur of the following: (i) the
effectiveness of an S-8 registration statement including the Shares, (ii) the
affirmative vote of shareholders of the Company approving an amendment to the
Articles of Incorporation to increase the Company's authorized common stock and
approving the issuance of the Shares and (iii) the listing on the American Stock
Exchange of the Shares (collectively the "Issuance Conditions"). The aggregate
value of the Consulting Fee shall be determined by multiplying the market value
of the Company's publicly traded common stock as of the close of trading on the
Page 2
trading day immediately preceding the date of payment to Consultant by the
number of Shares.
3. Term. The initial term ("Term") of the Consultant's Services hereunder
shall commence on August 3, 2007, and shall continue in accordance with the
terms of this Agreement for a period of thirty-six (36) months from the date of
commencement, subject to termination as provided in this Agreement.
4. Representations and Warranties.
(a) The Company.
(i) Organization. The Company is duly organized, validly existing and
in good standing under the laws of the State of Michigan and is qualified
to conduct its business as a foreign corporation in each jurisdiction where
the failure to be so qualified would not have a material adverse effect on
the Company.
(ii) Authorization of Agreement, Etc. The execution and delivery of
this Agreement by the Company and the performance of its obligations
hereunder has been duly authorized by all requisite corporate action by the
Company and this Agreement has been duly executed by an authorized officer
and delivered by the Company. This Agreement, when executed and delivered
by the Company and Consultant, constitutes the valid and binding obligation
of the Company, subject to satisfaction of the Issuance Conditions,
enforceable against the Company in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other similar laws affecting creditors' rights an remedies
generally, and subject as to enforceability to general principles of
equity.
(iii) Shares Validly Issued; No Adverse Claims. All Shares issued by
the Company to Consultant hereunder shall be duly authorized, validly
issued, fully paid and non-assessable and the Company has or will have
undertaken all corporate action necessary to issue such Shares to
Consultant subject to satisfaction of the Issuance Conditions. To the
knowledge of the executive officers of the Company, there are no adverse
claims, actions, liens or any proceeding filed or threatened against the
Company that would restrict or otherwise prevent the issuance of the Shares
to Consultant or the performance by the Company of its obligations
hereunder other than the Issuance Conditions.
(iv) Shares are Registered and Listed on the AMEX. All Shares issued
by the Company to Consultant hereunder shall be free of any restrictive
legend, shall not be restricted shares and shall be issued to Consultant
under an effective registration statement on Form S-8. Such Shares shall be
listed on the American Stock Exchange ("AMEX").
(v) No Transfer of Interests in Debt. The Company has not sold,
transferred or otherwise conveyed to any third party any interest in any of
the Creditor Claims or Confirmed Debt obligations that are subject to
Page 3
Consultant's Services hereunder.
(vi) No Default. The issuance of the Shares and the performance of its
obligations hereunder, will not, either individually or in the aggregate,
result in the Company being deemed to be in default under, or in violation
of, any provision of any of its financing agreements, promissory notes,
mortgages, indentures or any other debt or equity instrument and related
agreements entered into by the Company or binding upon any material portion
of its assets.
(vii) SEC Filings. The Company has previously made, and will continue
to timely make, all SEC filings as required by the Securities and Exchange
Act of 1934 and the rules and regulation of the SEC promulgated thereunder
including, but not limited, all filings, if any, required by virtue of the
Company entering into this Agreement with, and the issuance of the Shares
to, Consultant.
(b) Consultant.
(i) Consultant is an individual, properly licensed to conduct his
business as currently conducted, both in the State of Texas, and in every
other jurisdiction in which in which registration is required in order to
perform the Services hereunder.
(ii) Consultant shall follow, abide by and comply with all federal and
state laws, rules and regulations applicable to the performance of the
Services hereunder.
5. Events of Default. The occurrence of any of the following events shall
constitute an "Event of Default" hereunder and unless waived by Consultant will
result in the immediate termination of this Agreement. An Event of Default shall
occur, if, (a) notwithstanding compliance by Consultant with his duties
hereunder and if, (b) not withstanding compliance by Xxxxxxxx Holding LLC with
its duties under a companion agreement of even date herewith: (the "FHLLC
Agreement"), the Company:
(i) applies for or consent to the appointment of a receiver, trustee
or liquidator of it or substantially all of its property;
(ii) makes a general assignment or all or substantially all of its
property for the benefit of creditors; or
(iii) files a voluntary petition in bankruptcy, or a petition or an
answer seeking reorganization or any arrangement with creditors or to take
advantage of any bankruptcy, reorganization, insolvency, moratorium,
marshalling of assets, readjustment of debt, or take any action for the
purpose of effecting any of the foregoing.
6. Remedies upon Default. If an Event of Default occurs and is continuing,
all Services by Consultant shall immediately cease and responsibility for the
management, negotiation and resolution of any and all outstanding unpaid and
Page 4
unsettled Creditor Claims and its associated liabilities shall automatically and
immediately revert to the Company.
7. [OMITTED]
8. [OMITTED]
9. Indemnification.
(a) The Company agrees to indemnify, defend and hold harmless Consultant
and its affiliates, including members, partners, employees, agents,
representatives and assigns (each, a "Consultant Indemnified Party"), from and
against any and all liabilities, judgments, awards, deficiencies, penalties,
fines, costs, expenses (including, without limitation, attorneys' and other
professional fees and costs), losses and other damages of any kind resulting
from any "Consultant Covered Claim" (as defined below), except to the extent
expressly prohibited by applicable law. For purposes thereof, the term
"Consultant Covered Claim" shall mean any suit, arbitration, action, audit,
hearing, proceeding, investigation or claim of any kind that may be asserted
against or otherwise involve (whether by subpoena, as a witness or otherwise) a
Consultant Indemnified Party relating in any way to :
(i) any breach of or violation of any applicable law, rule or
regulation or of any provision of this Agreement by the Company; and
(ii) any untrue or alleged untrue statement of a material fact
contained in a registration statement and prospectus relating to the
Registrable Securities, including any form of prospectus or in any
pre-effective or post effective amendment or supplement thereto, or in any
preliminary prospectus, or arising out of or relating to any omission or
alleged omission of a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading other than based on information
provided by the Consultant.
(b) The Consultant agrees to indemnify, defend and hold harmless the
Company, its parent and subsidiary entities, and their respective officers,
directors, employees, agents and representatives (each, and "Company Indemnified
Party"), from and against any and all liabilities, judgments, awards,
deficiencies, penalties, fines, costs, expenses (including, without limitation,
attorneys' and other professional fees and costs), losses and other damages of
any kind resulting from any "Company Covered Claim" (as defined below), except
to the extent expressly prohibited by applicable law. For purposes thereof, the
term "Company Covered Claim" shall mean any suit, arbitration, action, audit,
hearing, proceeding, investigation or claim of any kind that may be asserted
against or otherwise involve (whether by subpoena, as a witness or otherwise) a
Company Indemnified Party relating in any way to:
(i) any breach of or violation of any applicable law, rule or
regulation or of any provision of this Agreement by the Consultant, or any
false or misleading information provided by the Consultant for inclusion in
theS-8 registration statement;
Page 5
(ii) The Consultant's Services hereunder; and
(iii) any breach by Xxxxxxxx Holding LLC of its duties under the FHLLC
Agreement.
10. Confidentiality. The parties hereto have entered into that certain
Mutual Non-Disclosure and Confidentiality Agreement, dated as of June 14, 2007
(the "Confidentiality Agreement"). Each party hereto acknowledges and agrees
that this Agreement, and the terms and conditions contained herein, constitute
"Information" (as defined in the Confidentiality Agreement) and shall be subject
to and afforded the protections set forth in such Confidentiality Agreement as
if the entire terms and conditions of such Confidentiality Agreement were set
forth herein.
11. Binding Agreement. This Agreement constitutes the entire Agreement and
understanding between the parties and shall not be modified, altered, changed or
amended in any respect unless in writing and signed by both parties.
12. Press Releases. The Consultant may, from time to time, notify the
Company that the Consultant desires to issue a press release about the Services,
which shall be accompanied by a draft of the proposed press release. The
issuance of such press release shall be subject to the prior approval of the
Company and its counsel, which shall base their determination on accuracy, the
need for confidentiality and the business interests of the Company.
13. Severability. In the event that any of the provisions of this Agreement
are held to be invalid or unenforceable in whole or in part, those provisions to
the extent enforceable and all other provisions shall nevertheless continue to
valid and enforceable as though the invalid or unenforceable parts had not been
included in this Agreement.
14. Notices. Except as otherwise provided herein, any statement, notice, or
other communication that the Company or the Consultant may desire or be required
to give to the other shall be deemed sufficiently given or rendered if hand
delivered or if sent by registered or certified mail, return receipt requested,
or by facsimile transmission, addressed at the addresses hereinafter given or at
such other addresses as the other party shall designate from time to time by
prior written notice, and such notice shall be effective when the same is
received or mailed as herein provided.
Company: Tarpon Industries, Inc.
0000 Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
(000) 000-0000 (phone)
(000) 000-0000 (fax)
Attention: Xxxxx X. Xxxxxxxx, CEO
With a copy to: Xxxxxx X. Xxxxxx, Esq.
Page 6
Ruskin Moscou Faltischek, P.C.
East Tower, 15th Floor
0000 XxxXxxx Xxxxx
Xxxxxxxxx, Xxx Xxxx, 00000-0000
(000) 000-0000 (phone)
(000) 000-0000 (fax)
Consultant: Xx. Xxxx Xxxxxxxx
0000 Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
(000) 000-0000 (phone)
(000) 000-0000 (fax)
With a copy to: Xxxxxxxxxxx X. Xxxxxx, Esq.
Traveland & Jiongo, LLC
X.X. Xxx 000000
Xxxxx, XX 00000
(000) 000-0000 (phone)
(000) 000-0000 (fax)
Each party may change its address for receipt of notices under this
Agreement from time to time by giving written notice of such change in the
manner provided above.
15. Counterparts; Facsimile or Electronic Signatures. This Agreement may be
executed in several counterparts, each of which shall be deemed to be an
original but all of which together will constitute one and the same instrument.
This Agreement and any amendments, addenda or supplements hereto by be executed
via exchange of facsimile signatures or pdf files containing one or more
electronic signatures and such facsimile signatures or pdf files with electronic
signatures shall have the same force and effect as original signatures for all
purposes.
16. Waiver. No term or condition of this Agreement shall be deemed to have
been waived, nor shall there be an estoppel against the enforcement of any
provision of this Agreement, except by written instrument of the party charged
with such waiver or estoppel. Neither the failure nor any delay on the part of
either party to exercise any right, remedy, power or privilege under this
Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, remedy, power or privilege preclude any other or further
exercise of the same or of any other right, remedy, power or privilege, nor
shall any waiver of any right, remedy, power or privilege with respect to any
occurrence be construed as a waiver of such right, remedy, power or privilege
with respect to any other occurrence.
17. Headings. The headings of Sections and paragraphs herein are included
solely for convenience of reference and shall not control the meaning or
interpretation of any of the provisions of this Agreement.
18. Governing Law and Venue. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE WITHOUT REGARD TO
Page 7
ITS PRINCIPLES CONCERNING CONFLICTS OF LAWS. AS A MATERIAL INDUCEMENT TO
CONSULTANT TO ENTER INTO THIS AGREEMENT, COMPANY IRREVOCABLY AGREES AND CONSENTS
THAT VENUE FOR ANY ACTION OR SUIT BROUGHT HEREUNDER OR IN CONNECTION HEREWITH,
OR RELATING HERETO, SHALL LIE WITH THE FEDERAL AND STATE COURTS LOCATED WITHIN
KANSAS CITY, MISSOURI TO THE MAXIMIM EXTENT PERMITTED BY APPLICABLE LAW, THE
PARTIES HERETO IRREVOCABLY CONSENT AND AGREE THAT THEY SHALL WAIVE ALL RIGHT TO
TRIAL BY JURY IN CONNECTION WITH ANY CLAIM, ACTION OR PROCEEDING ARISING UNDER
OR RELATING TO THIS AGREEMENT.
19. No Third Party Beneficiaries. Each of Company and the Consultant agree
that there are no third party beneficiaries of this Agreement and that no third
party shall have any interest in this Agreement or the right to enforce any of
the terms and provisions herein.
20. Contract Terms to be Exclusive. This Agreement contains the sole and
entire agreement between the parties and shall supersede any and all other
agreements between the parties. The parties acknowledge and agree that neither
of them has made any representation with respect to the subject matter of this
Agreement or any other agreement executed between them or any representations
inducing the execution and delivery hereof or any other agreement executed
between them except such representations as are specifically set forth herein
and each of the parties hereto acknowledges that it has relied on its own
judgment in entering into the same. The parties hereto further acknowledge that
any statements or representations that may have heretofore been made by either
of them to the other are void and of no effect and that neither of them has
relied thereon in connection with its dealings with the other.
[Remainder of Page Intentionally Left Blank]
Page 8
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.
COMPANY: CONSULTANT:
TARPON INDUSTRIES, INC.
By: /s/ Xxxxx X. Xxxxxxxx /s/ Xx. Xxxx X. Xxxxxxxx, Xx.
________________________________ ___________________________________
Name: Xxxxx X. Xxxxxxxx Xx. Xxxx X. Xxxxxxxx, Xx.
Title: CEO
Page 9
