FINANCIAL ADVISORY SERVICES AGREEMENT
FINANCIAL ADVISORY SERVICES AGREEMENT, made as of the 1st day of January,
1997, by and between Leak-X Environmental Corporation having an address at 000
Xxxx Xxxxxx Xxxxxx, Xxxxx 000, Xxxx Xxxxxxx, Xxxxxxxxxxxx 00000-0000 (the
"Company"), and Andrew, Alexander, Wise & Company, Incorporated having an
address at 00 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the "Consultant").
In consideration of the mutual promises made herein and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Purpose. The Company hereby engages the Consultant for the term
specified in 2 hereof to (a) render consulting advice to the Company as an
investment banker relating to financial and similar matters and (b) to act as
a market maker for the Company's common stock, par value, $.001 per share (the
"Common Stock"), each on the terms and conditions set forth herein.
2. Term; Termination. Except as otherwise provided herein, the initial
term of this Agreement shall be for a period of 24 months, commencing with the
month of January 1997 and ending on the last day of December 1998 (the
"Initial Term"), and shall be automatically renewable, unless canceled with 90
days written notice prior to the expiration of the respective term, for two,
successive 24-month periods (the "Additional Term"). This Agreement may not
be terminated by any party prior to the end of the Initial Term, or during any
Additional Term, except for cause. The Initial term and any Additional term
shall be referred to herein collectively, as the "Term". For purposes of this
Agreement, Cause is defined as (i) reckless disregard by any party with
respect to the performance of its duties as set forth herein, (ii) wilful
misfeasance, or (iii) any act of dishonesty by either the Consultant, on the
one hand, or any member of the Company Group, or the other hand, with respect
to the other.
3. Duties of the Consultant.
a. During the Term, the Consultant shall seek out and structure
Transactions (as hereinafter defined) on behalf of the Company and its
affiliates, as defined in the Securities Act of 1933, as amended (the
"Securities Act"), in connection with any such Transactions. The Company and
its affiliates, and their respective control persons are sometimes referred to
herein as the "Company Group."
b. During the Term, the Consultant shall also use its best efforts to
make a market for the Common Stock. In connection with such undertaking, the
Consultant acknowledges, agrees and represents that: (i) it shall conduct such
market-making activities in strict compliance with all requirements of
applicable law and regulations, including, but not limited to, the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations promulgated thereunder, the rules and regulations of the National
Association of Securities Dealers (the "NASD") and those of any other
self-regulatory bodies governing the conduct of the Consultant; and (ii) in no
event shall the Consultant, in the conduct of its consulting services
hereunder, provide information to its personnel conducting market-making
activities pursuant hereto in any manner whatsoever that would violate any of
the aforesaid laws, rules or regulations or any provision of this Agreement.
c. As used in this Agreement, the term "Offering" shall mean any
transaction in which the Company or any of its affiliates raises capital upon
the issuance of any of its or their equity or debt securities and for which
the Consultant acts as placement agent or broker-dealer during the Term.
d. As used in this Agreement, the term "Transaction" shall mean any
transaction originated by the Consultant during the Term, other than in the
ordinary course of trade or business of the Company or any of its affiliates
(i) whereby (A) directly or indirectly, control of, or a material interest in,
the Company, any of its affiliates or any of their respective businesses or
assets is transferred for Consideration (as hereinafter defined), (B) the
Company or any of its affiliates acquires any other company, or the assets of
or any equity interest in any other company, or (ii) involving an Offering.
Any Transaction covered by clause (A) or clause (B) of this Section 3(d)(i) is
hereinafter referred to as an "Acquisition."
e. The term "Consideration," as used in this Agreement in connection
with any Acquisition, shall mean the total market value, on the day of closing
of such acquisition, of any stock, cash, assets and all other property, real,
personal, tangible or intangible, exchanged or received, directly or
indirectly, by the Company or any of its affiliates or any of its or their
security holders in connection with such Acquisition. The term
"Consideration," as used in this Agreement in connection with any Offering
shall mean the compensation provided pursuant to Sections 4(a) through 4(c)
hereof. The Consultant shall have sole and exclusive responsibility for
payment of any compensation due to any co-broker in connection with any
Transaction or other party that assists the Consultant in initiating such
Transaction other than any such party engaged directly by the Company.
4. Compensation.
a. The Company shall pay to the Consultant a fee of $5,000 per month,
for each month during the Term, payable monthly in advance; provided, however,
that in the event that the Consultant shall initiate and assist in any
Offering, the Company shall receive a credit equal to six monthly payments, or
the sum of $30,000, against commissions or other compensation otherwise due
and payable by the Company hereunder to the Consultant.
b. The Company shall reimburse the Consultant for reasonable expenses
incurred by the Consultant in the performance of its duties hereunder. All
expenses of the Consultant which the Company is obligated to pay hereunder
shall be paid by the Company within 30 days after the Company's receipt of
invoices and appropriate accounting therefor.
c. In the event that any Offering is consummated during the Term, the
Company shall pay the Consultant commissions for its service as the placement
agent or broker-dealer in connection with such Offering equal to ten percent
(10%) of the capital raised thereby and shall reimburse the Consultant for the
reasonable out-of-pocket expenses it incurs in connection with any Offering in
an amount not to exceed three percent (3%) of the gross proceeds thereof.
d. In the event that any Acquisition is either consummated or a
definitive stock or asset acquisition agreement is executed by all parties
with respect to an Acquisition during the Term, the Company shall pay fees to
the Consultant as follows:
Consideration Fee
0 to First $1,000,000 5%
Second $1,000,000 4%
Third $1,000,000 3%
Fourth $1,000,000 2%
Consideration in excess
of Fourth $1,000,000 1%
e. Effective February 3, 1997, the Company shall issue to the Consultant
warrants to purchase up to 30,500 shares of Common Stock, at a purchase price
per share equal to the average of the bid and asked price thereof on February
3, 1997, exercisable for a period commencing on such date and extending
through December 31, 2001 (the "Warrants"), pursuant to the terms of a
separate Warrant Certificate in the form of Exhibit A attached hereto, to be
issued by the Company effective February 3, 1997 (the "Warrant Certificate").
In the event that the Company files a registration statement, other than one
on Form X-0, X-0 or any successor Forms thereto, at any time from the date
hereof through and including December 31, 1998, the Consultant, as the holder
of the Warrants, shall have the right to require that the Company include the
Warrants and/or the shares of Common Stock issuable pursuant thereto in such
registration statement. Thereafter, for a period of three years commencing on
January 1, 1999 through and including December 31, 2001, the Consultant shall
have the right to require that the Company file a registration statement
pursuant to the Securities Act, which registration statement shall include the
Warrants, by giving written notice thereof to the Company. The Consultant
shall be entitled to so require the Company to file a registration statement
pursuant to this Section 4(e) on only one (1) occasion. The Company shall
file such a registration statement within ninety (90) days of receipt of such
notice, and shall thereafter use its best efforts to: process such
registration statement to effectiveness and; cause such registration statement
to become effective as promptly as practicable. The Company shall promptly
file all such supplements and post-effective amendments to such registration
statement and take such other further actions as may be necessary and
appropriate to make available to the Consultant, on as continuous a basis as
is practicable, a prospectus meeting the requirements of the Securities Act
through the earliest of (i) the date on which all of the shares issuable upon
exercise of the Warrants shall have been sold and distributed by the
Consultant, (ii) the date on which, in the opinion of counsel to the Company,
all such shares and all other shares of Common Stock held by the Consultant on
the date hereof may be immediately transferred pursuant to the provisions of
Rule 144 promulgated under the Securities Act, and (iii) December 31, 2001.
The Consultant acknowledges and agrees that the Company cannot, and does
not hereby, make any representations or warranties whatsoever, express or
implied, as to the ability of the Company to have any registration statement
or post-effective amendment thereto declared effective.
f. Except as otherwise provided herein, all fees payable to the
Consultant hereunder in connection with any Transaction shall be due and
payable to the Consultant in readily available funds at the closing of such
Transaction.
g. Nothing contained in this Agreement shall in any way obligate any
member of the Company Group to enter into any Transaction.
h. Nothing contained in this Agreement shall in any way prohibit any
member of the Company Group from using any other consultant or financial
advisor, including, but not limited to, Dictor Capital Corporation, to seek
out Transactions, other than Offerings, and no compensation shall be due
hereunder to the Consultant for any Transaction initiated by any other party.
5. Confidentiality.
a. The Company acknowledges that all opinions and advice, written or
oral, given by the Consultant to any member of the Company Group or any of its
affiliates in connection with the Consultant's engagement hereunder are
intended solely for the benefit and use of members of the Company Group in
considering the Transaction to which they relate, and the Company agrees that
no person or entity other than the members of the Company Group shall be
entitled to make use of or rely upon the advice of the Consultant to be given
hereunder, and no such opinion or advice shall be used for any other purpose
or reproduced, disseminated, quoted or referred to at any time, in any manner
or for any purpose, nor may the Company or any of its affiliates use the
Consultant's name in any annual reports or any other reports or releases,
except as required by applicable law or regulations, without the Consultant's
prior written consent.
b. The Consultant shall hold in confidence any confidential information
which the Company or any of its affiliates provides to the Consultant pursuant
to this Agreement unless the Company otherwise consents in writing, and then
only with respect to the information which the Company specifies in such
writing and only with respect to any third party specified therein.
Notwithstanding the foregoing, the Consultant shall not be required to
maintain confidentiality with respect to any information (i) which is or
becomes part of the public domain through the conduct of any party other than
the Consultant; (ii) of which the Consultant had independent knowledge, other
than through its conduct as a market maker prior to disclosure; (iii) which
comes into the possession of the Consultant in the normal and routine course
of its own business from and through independent non-confidential sources,
except as may be required in order to comply with the provisions of Section
3(b) hereof; or (iv) which is required to be disclosed by the Consultant by
law or any governmental process. If the Consultant is requested or required
(by oral questions, interrogatories, requests for information or document
subpoenas, civil investigative demands, or similar process) to disclose any
confidential information supplied to it by any member of the Company Group, or
the existence of other negotiations in the course of its dealing with any of
them or any of their respective representatives, the Consultant shall, unless
prohibited by law or the requirement of any regulatory body, promptly notify
the Company of such request(s) so that the Company may seek an appropriate
protective order.
c. The obligations of the parties under this Section 5 shall survive
termination of this Agreement.
6. Consultant's Services to Others. The Company acknowledges and agrees
that:
a. The Consultant and its affiliates, if any, are in the business of
providing financial and market making services and consulting advice to
others, and that except with respect to the provisions of Section 5(b) hereof,
nothing contained herein shall be construed to limit or restrict the
Consultant in conducting such business with respect to others, or in rendering
such advice to others; and
b. Except as provided in Section 3(b) hereof, nothing contained in this
Agreement shall limit or restrict the right of the Consultant or of any
partner, employee, agent or representative of the Consultant, to be a partner,
director, officer, employee, agent or representative of, or to engage in, any
other business, whether of a similar nature or not.
7. Indemnification.
a. The Company shall indemnify and hold the Consultant and its partners,
stockholders, officers, directors, control persons and employees harmless from
and against any and all liabilities, claims, lawsuits, including any and all
awards and/or judgments to which it may become subject under the Securities
Act, the Exchange Act or any other federal or state statute, at common law or
otherwise or any regulations promulgated thereunder, insofar as said
liabilities, claims and lawsuits (including reasonable costs and expenses,
awards and/or judgments) arise out of or are in connection with the services
rendered by the Consultant or any Transactions subject of this Agreement,
except for any liabilities, claims and lawsuits (including awards and/or
judgments), arising out of the acts or omissions of the Consultant. In
addition, the Company shall also indemnify and hold the Consultant harmless
from and against any and all costs and expenses, including reasonable counsel
fees, incurred by the Consultant and relating to the foregoing.
The Consultant shall give the Company prompt notice of any such
liability, claim or lawsuit which the Consultant may contend is the subject
matter of the Company's indemnification, and the Company thereupon shall be
granted the right to take any and all necessary and proper action, at its sole
cost and expense, with respect to such liability, claim and lawsuit, including
the right to settle, compromise and dispose of such liability, claim or
lawsuit, excepting therefrom any and all proceedings or hearings before any
regulatory bodies and/or authorities.
b. In order to provide for just and equitable contribution under the
Securities Act or Exchange Act in any case in which (i) any person entitled to
indemnification under this Section 7 makes claim for indemnification pursuant
hereto, but it is judicially determined (by the entry of a final judgment or
decree by a court of competent jurisdiction and the expiration of time to
appeal or the denial of the last right of appeal) that such indemnification
may not be enforced in such case notwithstanding the fact that this Section 7
provides for indemnification in such cases, or (ii) contribution under the
Securities Act or the Exchange Act may be required on the part of any such
person in circumstances for which indemnification is provided under this
Section 7, then, and in each such case, the Company and the Consultant shall
contribute to the aggregate losses, claims, damages or liabilities to which
they may be subject (after any contribution from others) in such proportion
taking into consideration the relative benefits received by each party from
the Transactions covered by any prospectus, offering memorandum or acquisition
documents with respect to any Transactions in connection with this Agreement
(taking into account the portion of the proceeds of the Transaction realized
by each), the parties' relative knowledge and access to information concerning
the matter with respect to which the claim was assessed, the opportunity to
correct and prevent any statement or omission and other equitable
considerations appropriate under the circumstances; provided, however, that
notwithstanding the above, in no such case shall any person guilty of a
fraudulent misrepresentation (within the meaning of Section ll(f) of the
Exchange Act) be entitled to contribution from any person that was not guilty
of such fraudulent misrepresentation.
Within fifteen (15) days after receipt by any party to this Agreement (or
such party's representative) of notice of the commencement of any action, suit
or proceeding, such party will, if a claim for contribution in respect thereof
is to be made against another party (the "Contributing Party"), notify the
Contributing Party of the commencement thereof, but the omission so to notify
the Contributing Party will not relieve it from any liability which it may
have to any other party other than for contribution hereunder. In case any
such action, suit or proceeding is brought against any party, and such party
notifies a Contributing Party or his or its representative of the commencement
thereof within the aforesaid fifteen (15) days, the Contributing Party will be
entitled to participate therein with the notifying party and any other
Contributing Party similarly notified. Any such Contributing Party shall not
be liable to any party seeking contribution on account of any settlement of
any claim, action or proceeding effected by such party seeking contribution
without the written consent of the Contributing Party. The indemnification
provisions contained in this Section 7 are in addition to any other rights or
remedies which either party hereto may have with respect to the other or
hereunder.
c. The obligations of the parties under of this Section 7 shall survive
termination of this Agreement.
8. Independent Contractor Status of Consultant. The Consultant shall
perform its services hereunder as an independent contractor and not as an
employee of the Company or any affiliate thereof. It is expressly understood
and agreed to by the parties hereto that the Consultant shall have no authority
to act for, represent or bind the Company or any affiliate thereof in any
manner, except as may be agreed to expressly by the Company in writing.
9. Notices. Any notice or communication permitted or required hereunder
shall be in writing and shall be deemed sufficiently given if hand-delivered
or sent (a) postage prepaid by overnight courier, or by registered mail,
return receipt requested, or (b) by facsimile, to the respective parties as
set forth below, or to such other address as either party may designate by
notice given to the other party or parties in writing as provided in this
Section 9:
If to the Company or any of its affiliates, to:
Leak-X Environmental Corporation
000 Xxxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxx
Chief Executive Officer
Telecopy No.: (000) 000-0000
with a copy to:
Snow Xxxxxx Xxxxxx P.C.
000 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxx, Esq.
Telecopy No.: (000) 000-0000
If to the Consultant, to:
Andrew, Alexander, Wise & Company, Incorporated
00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxxxx, President
Telecopy No.: (000) 000-0000
10. Governing Law. This Agreement shall be construed in accordance with
and governed by the laws of the State of New York, without giving effect to
the provisions thereof relating to the conflict of laws.
11. Venue. The parties hereby agree that any dispute which may arise
between or among them arising out of or in connection with this Agreement
shall be adjudicated before a court located in New York City, and they hereby
submit to the exclusive personal jurisdiction of the courts of the State of
New York located in New York, New York and of the Federal District Court for
the Southern District of New York with respect to any action or legal
proceeding commenced by any party, and they irrevocably waive any objection
they now or hereafter may have respecting the venue of any such action or
proceeding brought in such a court or respecting the fact that such court is
an inconvenient forum, relating to or arising out of this Agreement, and
consent to the service of process in any such action or legal proceeding by
means of registered or certified mail, return receipt requested, in care of
the address set forth in 9 hereof.
12. Assignment. This Agreement may not be assigned or otherwise
transferred and the obligations of any party hereunder may not be delegated
without the prior written consent of the other parties hereto.
13. No Waiver. The failure or neglect of any party hereto to insist, in
any one or more instances, upon the strict performance of any of the terms or
conditions of this Agreement, or waiver by any party of strict performance of
any of the terms or conditions of this Agreement, shall not be construed as a
waiver or relinquishment in the future of such term or condition, but the same
shall continue in full force and effect.
14. Entire Agreement; Modification. This Agreement, including any
Exhibits hereto, constitutes the entire agreement and understanding of the
parties hereto with respect to the subject matter hereof and supersedes any
and all prior agreements and understandings, whether oral or written, between
or among the parties with respect to the matters set forth herein.
15. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of each of the parties hereto and their respective
successors, legal representatives and assigns.
16. Counterparts. This Agreement may be executed in any number of
counterparts, which together shall constitute one and the same original
document.
IN WITNESS WHEREOF, this Agreement has been executed by the parties
hereto as of the date first above written.
LEAK-X ENVIRONMENTAL CORPORATION
By: /s/ Xxxxx X. Xxxxx
Xxxxx X. Xxxxx
Chief Executive Officer
ANDREW, ALEXANDER, WISE & COMPANY,
INCORPORATED
by: /s/ Xxxxxxx Xxxxxxxx
Xxxxxxx Xxxxxxxx
President
