0708611 B.C. LTD.
000, 0000 XXXXXX XXXXXX
XXXXXXXXX, XX X0X 0X0
February 4, 2005
---------------------
EAPI Entertainment, Inc. (Name to be changed to Organic Recycling Technologies
Inc.)
000 - 0000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxx, XX
X0X 0X0
Dear Sirs:
RE: FISCAL AGENCY AGREEMENT
-------------------------------
We understand that EAPI Entertainment, Inc. (name to be changed to Organic
Recycling Technologies Inc.) (the "Company") wishes to engage 0708611 B.C. Ltd.
(the "Agent") on a non-exclusive basis, to provide the Company services as its
international fiscal, technical and financial agent and advisor for technical
and corporate advice and related services concerning various corporate fiscal,
technical and related activities. The Agent hereby agrees to act for the
Company in such capacity upon the following terms and conditions:
1. The Agent will provide the following advice and services
(collectively, the "Services") to the Company for an initial term of five
year's effective as of the date of this letter (unless the Agent's
engagement is otherwise terminated in accordance with the provisions
hereof):
(a) advice with respect to various general corporate and project
finance possibilities, including without limitation debt/equity swaps,
barter arrangements and similar financial arrangements;
(b) assistance in identifying potential joint venture partners;
(c) advice concerning potential merger opportunities, including
performing an active role in advising and assisting the Company in the
negotiation of any such merger; and
(d) acting as the Company's financial advisor with respect to any
solicited or unsolicited takeover bids made for the shares of the
Company;
(e) advice and assistance concerning any marketing or introduction
services related to any of the foregoing;
(f) advice on various technical matters.
2. Agent will provide the Services at customary rates or on success fee based
xxxxxxxx for the Services, as invoiced. The Agent will invoice the Company
as and so often as
1
determined by the Agent, specifying the Services provided and the fees
earned during the previous billing period. As may be mutually agreed from
time to time between the Company and the Agent, subject to regulatory
approval or the requirements of all applicable laws, the Company may be
permitted to pay such invoices for Services in common shares in the capital
of the Company (the "Shares") at a deemed issuance price equal to the
closing price of the Company's common shares on the date of the invoice or
otherwise as permitted under applicable law.
3. Both the Company and the Agent agree that a first advance of
US$100,000.00 is to be made upon the agreement being signed. This amount
will be applied to future invoiced amounts.
4. If the Agent assists the Company to arrange a financing or other
corporate material change pursuant to which a fee would normally be paid in
the course of the industry, the Company will pay the Agent a finder's fee,
success fee or a commission in an amount to be agreed upon.
5. The Company represents and warrants to the Agent that:
(a) the Company and its subsidiaries, if any, are valid and
subsisting corporations duly incorporate and in good standing under
the laws of the jurisdictions in which they are incorporated,
continued or amalgamated; (b) this Agreement has been authorized by
all necessary corporate action on the part of the Company.
6. The Agent represents and warrants to the Company that:
(a) it is valid and subsisting corporation under the laws of the
jurisdiction in which it was incorporated, continued or amalgamated;
and
(b) this Agreement has been authorized by all necessary corporate action
on the part of the Agent.
7. The Agent may terminate its obligations under this Agreement upon 30
days prior written notice to the Company or immediately by written notice
to the Company at any time:
(c) there is an adverse Material Change in the affairs of the
Company;
(d) there is an occurrence of any nature which, in the opinion of the
Agent, may materially adversely affect the business of the Company;
(e) the Company is in breach of any term of this Agreement; or
(f) the Agent determines that any of the representations of
warranties made by the Company in this Agreement is correct.
8. The Company may terminate this agreement upon 30 days prior written notice
to the Agent.
9. The Company will indemnify and hold harmless (the "Indemnity") the Agent
and each of the "Affiliates" (as that term is defined in the Act)
directors, officers, agents and employees of the Company and its Affiliates
and each other person, if any, controlling the Company or any of its
Affiliates, to the full extent lawful, from and against any actions or
claims (collectively, "Claims" and individually, a "Claim") including
actions by shareholders, and all related damages, liabilities and losses,
other than lost profits or
2
remuneration or other costs of personnel, and including any reasonable
amount paid with the consent of the Company, not to be unreasonably
withheld, to settle a Claim, related to arising out of the engagement of
the Agent by the Company, as set forth in this agreement, or the Agent's
role in connection therewith, and will reimburse the Agent and any other
party entitled to be indemnified hereunder for all expenses (other than
remuneration or other costs of personnel, or expenses in the nature of
overhead, but including the fees of counsel to the Agent on a solicitor and
client basis as set forth below) reasonably incurred by it or any such
other indemnified party in connection with investigating, preparing or
defending any such Claim, whether or not in connection with pending or
threatened litigation to which it is a party; provided that the Company
will not be responsible for any Claims or expenses associated therewith
which are finally judicially determined to have resulted from the wilful
misconduct, bad faith or gross negligence of any indemnified party agent of
the Agent or any of its Affiliates, nor any person controlling the Agent or
any of its Affiliates, shall have any liability to the Company for or in
connection with such engagement except as a result of the Agent's wilful
misconduct, bad faith or gross negligence. The Indemnity shall be in
addition to any rights that the Agent or any indemnified party may have at
common law or otherwise.
10. Promptly after receipt by the Agent or any other indemnified party of
notice of, or the communication of, any Claim or of any fact which
reasonably might give rise to any Claim, the Agent or such other party
shall notify the Company in writing of such Claim or facts and the Company
shall assume the investigation and defence or contestation thereof and
shall employ counsel satisfactory to the Agent, acting reasonably and
neither the Agent nor such other party shall incur any expense as regards
such Claim or facts, including any investigation, for which the Company
would be liable to indemnify without the Company's prior written consent,
which shall not be unreasonably withheld. Notwithstanding the foregoing,
the Agent will be entitled to employ, at the expense of the Company,
counsel separate from counsel to the Company or to any other party in such
action if the Agent, acting reasonably, determines that a conflict in
interest exists which makes representation by counsel chosen by the Company
not advisable or that it is likely that such a conflict of interest will
develop.
11. The Company shall not be obliged pursuant to the Indemnity to pay, in
relation to any particular Claim or series of related Claims, the fees and
disbursements of more than one counsel in addition to those of its own
counsel.
12. The Agent will, and will cause any other indemnified party to, co-operate
fully with the Company in the investigation and defence of any Claim or
potential Claim.
13. The provision of the Indemnity shall service the termination of this
agreement. The Indemnity shall be in addition to any other liability which
the Company may have to the Agent at law or in equity and shall remain in
full force and effect regardless of any investigation made by or on behalf
of the Agent.
14. This agreement shall be governed by and construed in accordance with the
Laws of the Province of British Columbia and laws of Canada applicable
therein. This agreement supersedes any prior agreement, representation or
understanding between the Company and the Agent with respect to the subject
matter hereof.
3
14. The Company will pay the expenses of this Agreement and all the expenses
incurred by the Agent in connection with this Agreement including, without
limitation, the fees and expenses of the solicitors for the Agent. The
Company will pay these expenses even if approval of this Agreement is not
granted by the regulatory authorities or the transactions contemplated by
this Agreement are not completed or this Agreement is terminated, unless
the failure of acceptance or completion or termination is the result of
breach of this Agreement by the Agent.
15. Each party confirms and agrees that it has been duly advised (and fully and
fairly informed with respect to such matters) to obtain all necessary and
independent legal, accounting, taxation, financial and other applicable
professional advice and counsel, in all relevant jurisdictions, prior to
entering this Agreement and the transactions referenced herein. Each such
party has either obtained all such advice and counsel or has determined to
its own satisfaction, having been fully and fairly informed therein, not to
seek such advice and counsel.
16. This agreement and the Indemnity shall ensure to the benefit of the
respective successors and assigns of the parties hereto and of the
indemnified parties, and the obligations and liabilities assumed in this
agreement and in the Indemnity shall be binding upon their respective
successors and assigns.
Please confirm your agreement with us, as set forth above, by endorsing and
returning to us the enclosed form of this letter.
Yours very truly,
0708611 B.C. Ltd.
Per: /s/ Xxxxxxx Xxxxxx
_______________________________
Authorized Signatory
Xxxxxxx Xxxxx does hereby confirm its agreement with 0708611 B.C. Ltd. as
-----------------
set forth above.
Dated with effective this 4 day of February, 2005
----- ---------
EAPI Entertainment, Inc. (Name to be changed
to Organic Recycling Technologies Inc.):
Per: /s/ Xxxx Xxxxxxx
_______________________________
4
