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Exhibit 10.42
CDL CAPITAL CORP.
0000 Xxxxx Xxxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
March 10, 1998
Xxxxxxx Xxxxxx, Chairman and CEO
Venturi Technology Enterprises, Inc.
0000 Xxxxx Xxxxx
Xxxx, Xxxx 00000
Re: Business and Financial Advisory Agreement
Dear Xxxxxxx:
The purpose of this letter agreement (the "Agreement") is to confirm
and set forth the terms and conditions of the engagement of CDL Capital Corp., a
Nevada corporation (the "Advisor") by Venturi Technology Enterprises, Inc., a
Nevada company (the "Company"), to render business and financial advisory
services to the Company for the purpose of assisting the Company's growth and
development and, where indicated, to raise funds to facilitate the achievement
of its business objectives.
The Company desires to develop business and marketing plans, financial
models, and funding strategies and to secure appropriate financing for its
business and has requested that Advisor assist it in structuring, preparing and
carrying out appropriate financing activities, which activities may include the
issuance and sale of the Company's securities or the structuring of other
business or financial arrangements. The services to be rendered by Advisor to
the Company shall be subject to the following terms and conditions:
1. Engagement. The Company hereby engages Advisor to act as the
exclusive financial advisor to the Company on a best efforts basis upon the
terms and conditions set forth herein, subject to the limitations and exceptions
stated herein, and Advisor hereby accepts such engagement. During the term of
its engagement, Advisor will consult with the Company in developing business and
marketing plans, financial models and funding strategies and in planning and
arranging transactions by which the Company may secure needed funding. In the
event the Company decides to offer its Common Stock or other equity or debt
securities to a limited
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number of investors in a private placement in compliance with applicable state
and federal securities laws, Advisor shall assist and advise the Company with
respect to the terms of the offering, the identification of suitable investors
and the preparation of any appropriate private placement memorandum, stock
purchase or subscription agreement or other disclosure or acquisition documents.
In the event the Company proposes to offer its Common Stock or other equity or
debt securities to the public pursuant to a registration statement filed with
the Securities and Exchange Commission in accordance with the Securities Act of
1933, as amended (a "Public Offering"), Advisor shall assist in advising the
Company with respect to the proposed Public Offering, including review of the
registration statement, the selection of the underwriter(s), the terms and
conditions of the agreements with the underwriter(s), and the timing and pricing
of the issue.
2. Compensation To The Advisor.
(a) Reimbursement of Expenses. Subject to the limitations stated
herein, the Company agrees to pay all reasonable out-of-pocket expenses,
including legal fees, travel expenses and other business related disbursements,
incurred by Advisor in acting on the Company's behalf hereunder, whether or not
any transactions contemplated hereunder are actually consummated, and in
addition to the fees payable under paragraphs 2(b) and 2(c) hereof. Advisor will
not expend or obligate the Company for expenses in excess of $1,000 without the
prior approval of the Company.
(b) Hourly Advisory Fees. Advisor shall be paid a fee for advisory
services rendered to the Company hereunder at a rate not to exceed $200 per
hour, whether or not any financing transaction or other Business Arrangement (as
defined below) is consummated, but subject to offset as provided in paragraph
2(d)(3) below. Advisor will not incur more than five hours of such advisory fees
on any one project without providing Company with reasonable notice thereof.
Such fees shall be paid monthly against delivery to the Company of an invoice
for the advisory services rendered.
(c) Success Fees. Subject to the other terms and conditions of this
Agreement, in the event that the Company consummates a debt or equity financing
(other than a Public Offering, the fees for which shall be limited to the hourly
fees set forth in paragraph 2(b) above) or participates in a Business
Arrangement, Advisor shall be entitled to a success fee calculated as follows:
(1) In the event of any transactions involving a private
placement or other issuance of the Company's equity securities (other
than a Public Offering), the Company shall pay Advisor a success fee of
ten percent (10%) of the total sum raised in such transactions.
(2) In the event of any transactions involving a debt
financing, the Company shall pay Advisor a success fee of five percent
(5%) of the gross proceeds to the Company from such transactions.
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(3) In the event the Company participates in any Business
Arrangements, as hereinafter defined, involving in part the raising of
funds through an issuance of equity securities or a debt financing,
then the Company shall pay to Advisor a success fee with respect to the
equity or debt financing portions of such transactions in an amount
equal to the percentage of the funds raised in such portions of such
transactions that would be payable if the transactions had been debt or
equity financings, the fees for which are payable pursuant to
paragraphs 2(c)(1) and 2(c)(2) above.
(4) In the event the Company participates in any Business
Arrangements, the Company shall pay Advisor a success fee of ten
percent (10%) of the aggregate amount of the acquisition or sale price
(payable in cash or otherwise and including deferred payments, if any),
less the amount of fees payable in cash or otherwise and including
deferred payments, if any), less the amount of fees payable with
respect to such Business Arrangements pursuant to paragraph 2(c)(3)
above.
(5) Any fees payable with respect to any transaction pursuant
to clauses (1), (2) or (3) of paragraph 2(c) shall be reduced by the
amount of any fees payable to any finder, promoter, investment banker,
broker or underwriter involved in the transaction (provided that such
obligation is not incurred in conflict with Advisor's exclusive rights
hereunder), so that the entire fees payable by the Company in
connection with a transaction (but not including fees payable to
attorneys and accountants) do not exceed the amounts provided in
paragraph 2(c).
(d) Retainer.
As a retainer, the Company will issue to Advisor a common
stock purchase warrant to purchase one hundred thousand (100,000)
shares of the common stock of the Company (the "Warrant") at an
exercise price of $2.05 per share exercisable at the Advisor's option
for a period of five (5) years. The Warrant shall be in a form
acceptable to the Advisor and shall be earned when received.
(e) Terms Relating to Payment of Fees.
(1) Subject to the other terms and provisions hereof, the fees
described in paragraph 2(c) hereof shall be payable with respect to any
financing transaction or Business Arrangement (i) consummated during
the term of this Agreement or (ii) consummated within twelve (12)
months after the termination hereof, by, through or with the assistance
of any individual or entity to whom the Company was introduced or with
whom the Company negotiated or communicated (through its officers,
directors or shareholders or through Advisor) during the term of this
Agreement.
(2) Any transactional fees payable under paragraph 2(c) shall
be paid in cash at the closing of the transaction or Business
Arrangement to which the fees relate. In the event the consideration
involved in a Business Arrangement is to be paid other than in cash at
the
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closing, then the present cash value of such deferred payments shall be
determined by the mutual agreement of Advisor and the Company and the
appropriate fee will be based on such present cash value.
(3) The fees payable with respect to any transaction pursuant
to paragraph 2(c) will be reduced by the amount of any fees paid
pursuant to paragraph 2(b), to the extent the advisory services
rendered for which the hourly fees are payable relate to any
transaction for which the transactional fees are payable.
(4) For the purposes of this Agreement, the term "Business
Arrangement" shall mean the acquisition, consolidation, merger,
purchase or other union of the business or assets or any part thereof
of a third party into or with the Company or an affiliated entity,
whether or not the Company is the surviving entity, or the sale of all
or substantially all of the assets of the Company to a third party.
"Business Arrangement" shall not mean, however, acquisition of a
competitor company, one or more, in the normal cause of effecting the
Company's business plan.
3. Obligations of the Company.
(a) Corporate Authorization. The Company agrees to take all necessary
and appropriate corporate actions to authorize all actions required to
implement, and all agreements and additional documents relating to, the
transactions contemplated hereby.
(b) Furnishing of Information. The Company will furnish to Advisor such
information and documents as Advisor may reasonably request to facilitate the
performance of Advisor's advisory services hereunder, including access to
facilities operated by the Company and to members of the management of Company
and copies of management reports, budgets and the like, furnished to the
management or directors of the Company.
4. Representations and Warranties of the Company. The Company
represents and warrants to Advisor that any information furnished or to be
furnished to Advisor for use in any business and marketing plans, financial
models or funding strategies, and in any private placement memorandum,
registration statement or other disclosure or offering document prepared for use
in connection with any financing transaction, Public Offering or Business
Arrangement will contain no untrue statement of any material fact nor omit to
state any material fact necessary to make the information furnished not
misleading, except to the extent subsequently corrected prior to the date of the
closing of any transaction to which such documentation relates. The Company
further warrants and represents that if the circumstances or facts relating to
information or documents furnished to Advisor change at any time subsequent to
the furnishing of such documentation or information to Advisor and prior to the
date of the consummation of any financing transaction, the Company will inform
Advisor promptly of such changes and forthwith deliver to Advisor documents or
information necessary to insure the continued accuracy and completeness of all
information and documents previously furnished.
5. Representations and Warranties of Advisor. Advisor represents to the
Company that
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during the term of this Agreement it will not make any untrue statement of
material fact or omit to state any material fact required to be stated or
necessary to make any statements made not misleading concerning any matters or
transactions contemplated by this Agreement. Advisor further represents and
warrants to the Company that all actions taken by it on behalf of the Company in
connection with any financing transaction or Business Arrangement will be
conducted in compliance with all applicable state and federal securities laws
and any procedures that might be reasonably imposed by the Company or its legal
counsel to ensure compliance with such laws.
6. Review and Approval of Documentation. The Company shall have the
right to review and approve, prior to distribution, the content of any business
or marketing plans, financial models, funding strategies, or disclosure or
offering documents prepared by Advisor in the performance of its services
hereunder.
7. Cooperation of Parties. Advisor shall cooperate with the Company and
its counsel with respect to the preparation of any business and marketing plans,
financial models, funding strategies, or any financing transaction, Public
Offering or Business Arrangement and in the preparation of any offering
memoranda, investor questionnaires, stock purchase or subscription agreements,
blue sky law compliance and the like as may be required as a result of any
actions taken by Advisor in the rendering of services to the Company hereunder.
8. No Obligation to Consummate Transactions. The Company shall not be
obligated to enter into any financial transaction or Business Arrangement which
may be presented to it by Advisor and Advisor shall have no authority to make
any representations on behalf of the Company or to otherwise bind the Company in
any manner whatsoever. If the Company elects to consummate a transaction
presented to it by or as a result of the efforts of Advisor, the final terms of
the transaction shall be subject to negotiation by the Company and its legal
counsel. The parties understand and acknowledge that neither party has
represented to or assured the other that a financing transaction or other
Business Arrangement will actually be entered into as a result of Advisor's
services hereunder.
9. Indemnification. The Company agrees to indemnify and hold Advisor
and each of its affiliates, directors, officers, employees and agents and any
person controlling (within the meaning of Section 15 of the Securities Act of
1933, as amended, or Section 20 of the Securities Exchange Act of 1934, as
amended) any such person or entity (hereinafter referred to collectively as the
"Indemnified Persons") harmless against and from any and all losses, claims,
damages, liabilities, joint or several, suffered or incurred by, or asserted
against, any Indemnified Person (including any amounts paid in settlement of any
action, suit or proceeding brought or threatened to be brought, if such
settlement is effected with the written consent of the Company) under any of the
federal securities laws, under any other statute, common law, or otherwise,
which arises in connection with or is based upon any document or transaction
contemplated by this Agreement but not as to information provided by or
representations made by the Advisor with regard to the Company which the Company
has not generally or specifically authorized, and to reimburse each Indemnified
Person for any travel, legal or other out-of-pocket expenses (including the cost
of any investigation and preparation) reasonably incurred by such Indemnified
Person in connection with any action, suit, proceeding or claim ("Litigation")
for which indemnification under the preceding clause may be
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sought (including the fees of counsel of such Indemnified Person's choice
retained in connection with investigating or defending against Litigation);
provided, however, that there shall be excluded from such indemnification and
reimbursement any such loss, claim, expense, damage or liability arising out of
or based upon the breach of Advisor's contractual duties to the Company
hereunder or the willful misconduct or gross negligence of the Indemnified
Persons; provided, further, that the Company shall not be liable for any loss,
claim, damage or liability resulting from any settlement entered into by an
Indemnified Person without the written consent of the Company as set forth
above; provided, further, that this indemnity shall not apply to any loss,
claim, damage, liability or expense resulting from information about an
Indemnified Person furnished by such Indemnified Person for use in any offering
or disclosure documentation prepared for use in any financing transaction or
Business Arrangement contemplated hereby. The Company shall be notified by any
Indemnified Person seeking indemnification by registered letter, of any action
commenced against such Indemnified Person, within a reasonable time after such
Indemnified Person shall have been served with the summons or other first legal
process or shall have received written notice of the threat of a claim in
respect of which an indemnity may be claimed, giving information as to the
nature and basis of the claim, but failure so to notify the Company shall not
relieve the Company from any liability which it may have hereunder or otherwise
except to the extent that such failure so to notify the Company materially
prejudices the rights of the Company. The Company shall be entitled to
participate at its own expense in the defense, and if the Company so elects
within a reasonable time after receipt of such notice, or if all Indemnified
Persons seeking indemnification on such notice so direct, the Company shall
assume the defense of any Litigation brought to enforce any such claim, and in
either such case, such defense shall be conducted by counsel chosen promptly by
the Company and reasonably satisfactory to Advisor; provided, however, that, if
the defendants in any such action include both an Indemnified Person and the
Company and such Indemnified Person shall have been advised by its counsel that
there may be legal defenses available to such Indemnified Person which are
different from or additional to those available to the Company, and which in the
reasonable opinion of such counsel are sufficient to make it undesirable for the
same counsel to represent both the Company and such Indemnified Person, such
Indemnified Person shall have the right to employ his own counsel in such
Litigation, and in such event the reasonable fees and expenses of such counsel
shall be borne by the Company. The foregoing indemnity and reimbursement
agreement shall be in addition to any other rights which an Indemnified Person
may have at common law or otherwise.
10. Term and Termination of Agreement. This Agreement shall remain in
full force and effect for a term of one (1) year from the date hereof, subject
to earlier termination as provided below, and subject to extension by mutual
agreement of the parties for an additional twelve (12) month period. During the
term hereof and subject to the limitations and exceptions stated herein, Advisor
shall be the exclusive financial advisor to the Company and the Company agrees
not to enter into any similar or like agreement with any other party during such
period without the prior written consent of Advisor. Advisor's engagement
hereunder may be terminated by either Advisor or the Company at any time after
the first anniversary of the date hereof. Following the expiration of this
Agreement or if Advisor's engagement is earlier terminated by the Company as
permitted herein, Advisor will be entitled to its full fees under paragraph 2(c)
of the Agreement with respect to financing transactions and Business
Arrangements consummated within twelve (12) months after such expiration or
termination, subject to the provisions of paragraphs 2(d) and 11 hereof, with
regard to
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any contact given the Company by Advisor. The indemnity provisions set forth
herein shall survive any termination of the Advisor's engagement hereunder.
11. Limitations and Exceptions to Exclusivity. The exclusivity
provisions of this Agreement are suspended until such time as Company has
received at least a $1 million capital infusion from the efforts of Advisor at
which time such provisions become effective ("Effectiveness"). On Effectiveness,
the exclusivity provisions of paragraphs 1, 2 and 10 hereof do not apply to
those persons and entities listed on Exhibit A hereto until June 30, 1998, when
the exclusivity provisions of this Agreement apply in all cases and to all
persons and entities without exception.
12. Rights of Parties. Advisor shall be entitled to assign all of its
rights and obligations hereunder to its designee reasonably acceptable to the
Company. Such assignment shall be effective upon the execution by such assignee
of a counterpart of this Agreement. Upon such assignment, the term "Advisor" is
used herein shall refer to such assignee. Except as otherwise provided above, no
party shall be entitled to transfer or assign any or its rights or obligations
hereunder without the prior written consent of the other party. Subject to the
foregoing, this Agreement shall be binding upon and inure to the benefit of, the
parties and their respective successors and assigns.
13. Legal Counsel; Waiver of Conflict of Interest. The parties have had
the opportunity to consider the terms of this agreement with their respective
legal counsel and have either obtained the advice of legal counsel in connection
with their execution hereof or do hereby expressly waive their right to seek
such legal counsel in connection with this transaction. Advisor and the Company
recognize that the law firm of Xxxxxx X. Xxxxxx & Associates has represented
each of them in the past, is presently representing them, and is likely to
represent each of them in the future. As a result, both Advisor and Company
waive any and all conflicts of interest which may have existed, which may exist
or which may arise in the future as a result of such representation.
14. Governing Law. This Agreement shall be interpreted in accordance
with its terms and otherwise in accordance with the laws of the State of Utah
applicable to contracts entered into and to be performed entirely within such
State.
15. Entire Agreement. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof, and supersedes
all prior agreements, understandings, representations and statements, if any,
whether oral or written, with respect to the subject matter hereof. No
modification of this Agreement shall be valid or binding upon the parties hereto
unless made in writing and signed on behalf of each party hereto by its
respective authorized officer.
16. Headings. The headings used in this Agreement have been inserted
for convenience only and are not to be considered in construing the meaning of
the Agreement.
If the foregoing is in accordance with the Company's understanding,
please sign and return
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the enclosed copy of this letter, whereupon this Agreement shall constitute a
binding agreement between the Company and Advisor.
Sincerely yours,
Xxxxx X. Xxxxxxx
President
This Business and Financial Advisory Agreement is acknowledged and agreed to by
the undersigned as of this 16 day of March, 1998.
Venturi Technology Enterprises, Inc.
By /s/ Xxxxxxx Xxxxxx
Xxxxxxx Xxxxxx, Chairman and CEO
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Exhibit A
PERSONS AND ENTITIES EXCLUDED FROM THE EXCLUSIVITY
PROVISIONS OF THAT CERTAIN BUSINESS AND FINANCIAL
ADVISORY AGREEMENT BETWEEN
VENTURI TECHNOLOGY ENTERPRISES, INC. AND CDL CAPITAL CORP. DATED MARCH 10, 1998:
1. Northstar Capital
2. Xxxx Xxxxxxxx
3. Mercantile Finance Corp.
4. Those persons and entities listed on Attachment A hereto
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