MANAGEMENT CONSULTING AND FINDERS AGREEMENT
THIS MANAGEMENT CONSULTING AND FINDERS AGREEMENT (this "Agreement") is made
as of the 4th day of January, 2005, by and between Eldorado Artesian Springs,
Inc., a Colorado corporation (the "Company"), and Capital Merchant Banc, LLC, an
Illinois limited liability company ("Consultant").
RECITALS:
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WHEREAS, the Company desires to engage Consultant to perform general
management, financial and corporate consulting services for the Company in
connection with the Company's development and operation of new water bottling
plants, and the Company's development and launch of a line of one-way recyclable
water delivery containers for use in home and office water cooler systems (the
"Project"), and further wishes to engage the assistance of Consultant in making
introductions of certain persons with whom Consultant has prior contacts and who
are Accredited Investors (as defined in Regulation D promulgated under the
Securities Act of 1933, as amended) as prospective investors in the Company; and
WHEREAS, Consultant is willing to be so engaged, and desires to introduce
such prospective investors to the Company.
AGREEMENTS
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NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
promises herein contained, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
hereby agree as follows:
1. Engagement of Consultant. The Company hereby engages Consultant, and
Consultant hereby accepts the engagement, to perform the services described in
Part I of Exhibit A hereto.
2. Term of Engagement. Consultant's engagement under this Agreement will
commence as of the date specified in Part II.A. of Exhibit A (the "Effective
Date") and will continue for the term specified in Part II.B. of Exhibit A
unless sooner terminated in accordance with the provisions of Section 6 (the
"Term").
3. Independent Contractor Status. During the Term, Consultant and the
Company acknowledge and agree that Consultant is an independent contractor for
Federal and state income tax purposes and that Consultant shall be solely
responsible for full payment of all tax liabilities on any compensation paid to
Consultant hereunder.
4. Compensation. In consideration for the performance of Consultant's
duties hereunder: (i) Consultant was paid $25,000 as a first installment of its
compensation hereunder (which amount is fully earned and non-refundable), (ii)
Consultant shall be paid during the Term at the rate specified in Part III.A. of
Exhibit A, and payable in the manner specified in Part III.B. of Exhibit A and
(iii) the Company shall have executed and delivered to Consultant the Warrant in
the form of Exhibit B attached hereto.
5. Expenses. Consultant shall be entitled to reimbursement for normal
business expenses which Consultant's employees and agents are required to incur
in providing the services hereunder provided that supporting documentation is
provided to the Company. Notwithstanding the foregoing, the Company shall not be
required to reimburse Consultant for total business expenses in excess of $1,000
in any calendar month, unless Consultant obtains prior written authorization
from the Company for any such expenses.
6. Termination. This Agreement shall terminate prior to the expiration of
the Term if (a) Consultant shall dissolve or (b) either party serves written
notice upon the other of intent to terminate (the "Termination Notice") as of a
date specified in such notice (the "Effective Date of Termination"), provided
that the Termination Notice is given at least that number of days prior to the
Effective Date of Termination as is specified in Part IV of Exhibit A. In the
event of termination of this Agreement, the Company shall no longer be obligated
to pay to Consultant any compensation (other than compensation accrued prior to
the Effective Date of Termination). Sections 7 through 16 of this Agreement will
survive expiration or early termination of this Agreement.
7. Confidentiality. Consultant hereby covenants and agrees that, without
the prior written consent of the Company, Consultant and its employees and
agents will not at any time disclose to any person (other than persons employed
or otherwise engaged by the Company and having a need to know such information
in order for Consultant to provide its services hereunder), or use for any
purpose other than providing the consulting (but not the finders) services under
this Agreement, any confidential or proprietary information of the Company.
Company hereby covenants and agrees that, without the prior written consent of
Consultant, the Company and its employees and agents will not at any time
disclose to any person not employed or otherwise engaged by Consultant, or use
for any purpose other than the Project, any confidential or proprietary
information of Consultant, other than information conveyed to Company by
Consultant in the course of Consultant's services under this Agreement. For the
purposes of this Agreement, the term "confidential or proprietary information"
will include all information of any nature and in any form that is owned by
Consultant or the Company, as applicable, and is not publicly available (other
than by a breach of this Section 7 by the party obligated to keep such
information confidential) or generally known to persons engaged in businesses
similar or related to those of the Company (in the case of confidential or
proprietary information of the Company) or Consultant (in the case of
confidential or proprietary information of Consultant). Confidential or
proprietary information will include, but will not be limited to, a party's
financial condition, results of operations, business matters, customers,
employees, industry contracts, business plans, product development (or other
proprietary product data), marketing plans, and all other secrets and all other
information of a confidential or proprietary nature. For the purposes of the two
preceding sentences, the terms Company, Consultant, and parties each refer to
any of the applicable party's subsidiaries or affiliates in addition to such
parties. The foregoing obligations imposed by this Section 7 will not apply (i)
if such confidential or proprietary information shall have become generally
known to the public through no fault of the party obligated to keep such
information confidential or (ii) if the party obligated to keep such information
confidential is required by law to make disclosure (after giving the other party
notice and an opportunity to contest such requirement).
8. Injunctive Relief. Consultant agrees that any violation of Section 7 of
this Agreement will cause the Company irreparable harm. Consultant agrees that
the Company is entitled to protection from such violation, including protection
by injunctive relief, in addition to other remedies available under the law.
9. Indemnification by Consultant. Consultant hereby agrees to indemnify and
hold the Company and its shareholders, directors, officers, employees and
affiliates harmless from and against any and all liabilities, demands, claims,
actions or causes of action, assessments, losses, costs, damages or expenses,
including reasonable attorneys' fees sustained or incurred by such persons,
resulting from or arising out of or in any way relating to, or by virtue of (i)
any breach of any representation or warranty on the part of Consultant under
this Agreement and Exhibit A attached hereto (unless the same will have been
waived by the Company in writing), (ii) any failure by Consultant to comply with
any applicable laws, rules or regulations, or (iii) any third-party claims
arising solely from Consultant's actions or failure to take action, except any
action or failure to take action by Consultant in accordance with Company's
direct instructions.
10. Indemnification by Company. Company hereby agrees to indemnify and hold
Consultant and its members, managers, directors, officers, employees and
affiliates harmless from and against any and all liabilities, demands, claims,
actions or causes of action, assessments, losses, costs, damages or expenses,
including reasonable attorneys' fees sustained or incurred by such persons,
resulting from or arising out of or in any way relating to, or by virtue of (i)
any breach of any representation or warranty on the part of the Company under
this Agreement and Exhibit A attached hereto (unless the same will have been
waived by Consultant in writing), (ii) any failure by the Company to comply with
any applicable laws, rules or regulations (other than as a result of
Consultant's conduct), or (iii) any third-party claims arising solely from
Company's actions or failure to take action, except any action or failure to
take action by Company in accordance with Consultant's recommendations or advice
in connection with the services rendered by Consultant hereunder.
11. Notices. All notices required to be given under this Agreement shall be
in writing and shall be personally delivered, sent by overnight courier or
facsimile, or mailed by certified or registered mail, return receipt requested,
and addressed as set forth in Part V of Exhibit A, until some other address
shall have been designated in a written notice given in a like manner. Notices
sent by mail shall be deemed received 5 days after deposit in the United States
mail, and notices delivered in any other manner shall be deemed to be given upon
receipt.
12. Severability. If any provision of this Agreement or any part hereof
shall be found to be illegal, invalid or otherwise unenforceable, such provision
or part thereof shall be deemed to have been deleted from this Agreement and
such deletion shall not affect the remaining provision of this Agreement, which
shall be given their full force and effect.
13. Entire Agreement. This Agreement contains the entire agreement and
understanding of the parties concerning the subject matter hereof, and no
representations, promises, agreements or understandings, written or oral, not
contained herein shall be of any force or effect.
14. Amendment. This Agreement shall be binding upon the parties hereto
unless the same shall be in writing and executed by each of the parties hereto.
15. Benefit of Agreement. This Agreement shall not be assignable by
Consultant, but shall be binding upon and inure to the benefit of the successors
and assigns of the Company.
16. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the internal laws of the State of Illinois, without regard to
the provisions thereof respecting the conflict of laws.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
ELDORADO ARTESIAN SPRINGS, INC.
By:
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Its:
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CAPITAL MERCHANT BANC, LLC
By:
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Its:
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EXHIBIT A TO
MANAGEMENT CONSULTING AND FINDERS AGREEMENT BETWEEN
ELDORADO ARTESIAN SPRINGS, INC. AND
CAPITAL MERCHANT BANC, LLC
Part I. Description of Services.
A. Consulting. Consultant hereby agrees to provide general management,
financial and corporate consulting services in order to assist the Company in
planning, launching and marketing the Project. Consultant further agrees to
assist the Company in negotiating the terms of debt financing with United
Financial Mortgage Corporation or other financial institutions, and in securing
lease financing for operating assets of the Company.
B. Introduction of Prospects; Identification. Consultant hereby further
agrees to use commercially reasonable efforts to introduce individuals to the
Company ("Prospects") for potential participation as investors in one or more
rounds of equity financing by the Company during the Term (as defined in Part
II.B of this Exhibit A). Prior to introducing any person to the Company as a
Prospect, Consultant will notify the Company of the name of such person in order
to determine whether the Company had previously been introduced to such person.
Unless (i) the Company agrees that it desires to be introduced to such person,
and (ii) Consultant makes a direct introduction of such person to the Company,
such person will not be --- deemed to be a "Prospect" for purposes of this
Agreement.
C. Representations Concerning Consultant's Activities. Consultant
represents and warrants to the Company as follows:
(1) Consultant will only introduce a Prospect to the Company if
Consultant reasonably believes that such Prospect is an accredited investor
as defined in Regulation D promulgated under the Securities Act of 1933, as
amended.
(2) Consultant or its members or employees will have a previously
existing relationship with each Prospect referred to the Company, and will
not engage in any general solicitation for the purpose of identifying or
producing Prospects.
(3) Neither Consultant nor any of Consultant's agents will have any
substantive discussions with any Prospect regarding the merits of an
investment in the Company, the suitability of an investment in the Company
for such Prospect's needs, the nature or terms of any such investment, or
any other subject matter directly or indirectly pertaining to an investment
in the Company, whether prior or subsequent to any investment such Prospect
may make in the Company, it being understood that Consultant is being
engaged hereunder to introduce Prospects only.
(4) This Agreement does not contemplate any obligations or duties on
the part of Consultant that require the registration or licensure of
Consultant as a broker or dealer within the meaning of the Securities
Exchange Act of 1934, as amended, or within the meaning of any applicable
state securities laws, and Consultant has not previously been engaged in a
business requiring such registration or licensure.
C. Non-Exclusivity. This Agreement is non-exclusive as to each party.
Consultant will be free to render services to other persons that are the same as
or similar to the services it renders hereunder to the Company, and the Company
will be free to engage other persons to provide services that are the same as or
similar to the services it is engaging Consultant to perform hereunder.
Part II. Term
A. Effective Date: January 4, 2005
B. Term: Unless sooner terminated in accordance with Section 6., the
later of (i) Two years and (ii) the end of the time required for the
installments to be paid under Part III B.
Part III. Compensation
A. Rate of Compensation: $400,000 annually, subject to (B) below.
B. Manner of Payment:
2nd installment-$175,000 within 10 days of the Company's receipt of
not less than $2,000,000 in financing, on terms acceptable to the
Company in its sole discretion ("2nd Installment").
3rd installment-$200,000 within 6 months of payment of the 2nd
installment ("3rd Installment").
4th installment-$200,000 within 6 months of payment of the 3rd
installment ("4th Installment").
5th installment-$200,000 within 6 months of payment of the 4th
installment.
Such installments may be made at earlier times in the Company's
discretion; however, the parties hereby agree that completion of the
financing set forth with regard to the 2nd installment is an express
condition to the Company's obligation to make any payments of the 2nd
installment and any subsequent installments.
Part IV. Termination
Number of days required for Termination Notice to be effective: 60 days.
Part V. Addresses for Notice:
If to Company:
Eldorado Artesian Springs, Inc.
0000 Xxxxxxx Xx.
Xxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx Xxxxxx
If to Consultant:
Capital Merchant Banc, LLC
000 X. Xxxxxxxxx Xxxx
Xxxx Xxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxx Xxxxxxxxxx
