EXHIBIT 10.89
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FINANCIAL ADVISORY AND CONSULTING AGREEMENT
This Consulting Agreement ("Agreement") is made and entered into this 5th
day of July, 2007 between Performance Health Technologies, Inc., 000 Xxxxx Xxxx
Xxxxx, Xxxxxxx, XX 00000 (the "Company"), and Xxxxxx Xxxxx Securities, Inc., a
Florida Corporation, 000 X. Xxxxxxx Xxxxxxx, 0xx Xxxxx, Xxxx Xxxxx, XX 00000
(the "Consultant").
In consideration of and for the mutual promises and covenants contained
herein, and for other good and valuable consideration (the receipt of which is
hereby acknowledged) the parties hereto mutually agree and intend to be legally
bound to the terms of this Agreement as follows:
1. PURPOSE. The Company hereby retains the Consultant during the term
specified to render consulting advice to the Company relating to financial
advisory services as set forth in Section 3 below, investment banking and
merger/acquisition matters, upon the terms and conditions as set forth herein.
2. TERMS AND CONSIDERATION.
(a) The term of this Agreement shall be for a period of twelve months
(12) months commencing from the Effective Date of this Agreement (the
"Engagement Period"), unless extended by mutual written agreement of the Company
and the Consultant. The Company shall pay Consultant $100,000 and 250,000 5 year
warrants (exercisable at $0.50) upon engagement. All warrants issued hereunder
will contain provisions for cashless exercise in favor of the Consultant.
(b) Success Fee. (i) In the event any transaction, other than an
Exchange Transaction (as defined below) unless the parties agree otherwise or a
Business Combination (as defined below), but including any debt, equity or other
financing arrangement, is consummated in whole or part during the Term with an
Investor introduced hereunder to the Company by Consultant (a "Transaction"),
the Company shall compensate Consultant as follows in addition to any
compensation under Section 2(a).
In the event of a Transaction consummated by the Company and/or its
affiliates, the Company shall pay Consultant a fee upon the closing of such
Transaction, equal to 5% of the Consideration (as defined below) paid by such
Investor.
(ii) In the event a Business Combination (as defined below) is
consummated in whole or in part during the Term with an Investor introduced
hereunder to the Company by Consultant, the Company shall compensate Consultant
as follows in addition to any compensation under Section 2(a).
In the event of the sale or merger of the Company and/or its
affiliates, including a subsidiary of the Company, or in the event of the sale
of significant assets of the Company and/or its affiliates (each, a "Business
Combination"), the Company shall pay Consultant a fee upon the closing of such
transaction, equal to 5% of the Consideration (as defined below).
(c) For purposes of this Agreement, "Exchange Transaction" shall mean
a debt, equity or other financing or the exchange or conversion of any
securities, a warrant exercise, option exercise, or transaction similar to the
foregoing.
(d) For purposes of this Agreement, "Consideration" shall mean the
value of all cash, securities and other property or other assets paid, payable
or received, including debt, liabilities and obligations which are assumed, in
connection with any transaction, including, without limitation: (i) any
distributions made to the Company or its shareholders in anticipation of the
closing; (ii) any employment or other contract enhancements or non-competition
payments (other than ordinary and customary compensation in connection with bona
fide employment agreements); (iii) any payments in connection with any separate
but related transaction or transactions affecting another business entity or any
of its assets or securities (eg., purchase or lease of any real estate or other
assets); and (iv) any indebtedness for monies borrowed, including payables,
pension liabilities and guarantees, which are assumed.
For purposes of determining Consideration, the value of any securities
(whether debt or equity) shall be deemed to be the higher of (i) the vaule of
the securities based upon such value as ascribed to and set forth in the
documents evidencing such transaction (ii) or the "market value" of such
securities. The "market value" of any such securities shall be deemed to be the
average of the last reported sales prices of the securities over the twenty (20)
consecutive trading days for which sales prices for such security are so
reported, ending on the trading day immediately prior to the date the
transaction is so consummated, and as such sales prices are reported on the
principal exchange on which the security is listed, or as the case may be, any
inter-dealer quotation system; provided, however, that if such twenty
consecutive trading day period exceeds a forty-five day calendar period, then
such average shall be based upon the number of trading days (less than twenty)
during which such security is so traded; and provided further, in the event such
security is not so traded on at least ten (10) of such trading days or in the
event there is no established public market for such security, the fair market
value of such security as of the date of the consummation of the transaction
thereof shall be determined by mutual agreement of the parties. In the event the
parties cannot mutually agree as to such valuation, such valuation shall be
determined by an independent appraiser mutually agreed to between the parties.
In the event the identity of such independent appraiser cannot be mutually
agreed to, then each party shall retain at the Company's sole cost and expense,
an independent appraiser, and the average of such appraised value shall be
deemed the market value of such security.
In addition, if any part of the Consideration shall be deferred or
contingent upon future earnings or other contingencies, then Consultant shall be
entitled to a cash fee on such additional Consideration, and the term
Consideration shall include such additional compensation which shall be payable
on the basis of the payment when made by the payor. The fee for such
Consideration paid or received in the future shall be payable when such
Consideration is paid and shall be calculated using the formula set forth in
this Section by adding this additional Consideration to all other Consideration
previously paid.
(e) Notwithstanding anything to the contrary herein, all warrants,
common stock
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or other securities issuable to the Consultant hereunder shall be due and earned
in full as of the date of this Agreement regardless of the issuance date that
may otherwise appear on any securities certificate.
3. FINANCIAL ADVISORY SERVICES OF CONSULTANT. Consultant, based on its
review of the Company to date, believes that it may assist the Company by
performing the financial advisory services that are listed below and Consultant
shall be limited to providing only those such financial advisory services to the
Company. In connection with Consultant providing such financial advisory
services to the Company, the Company shall provide Consultant with any
information reasonably available to the Company that Consultant deems
appropriate. The Company hereby acknowledges that Consultant will be using and
relying on said information without independent verification and that Consultant
assumes no responsibility for the accuracy and completeness of any information
provided to it by the Company. In performance of these duties, the Consultant
shall provide the Company with the benefits of its best judgment and efforts. It
is understood and acknowledged by the parties that the value of the Consultant's
advice is not measurable in any quantitative manner, and that the Consultant
shall not be obligated to spend any specific amount of time performing its
duties hereunder.
(a) Providing Company exposure to the investment community at large
through the dissemination of non-confidential information with the prior written
approval of the company.
(b) Assisting in the Company's financial public relations, by
participating in discussions with the Company and the financial community with
the company's approval.
(c) Advising the Company about its financial structure and that of its
divisions or subsidiaries or any of its projects, as such relate to the public
market for the Company's equity securities.
Should the Company desire Consultant to provide any financial advisory
service(s) not listed above, the Company and Consultant shall enter into an
additional engagement letter to be executed by the parties hereto at the
commencement of the additional financial advisory service(s) to be rendered by
Consultant.
(e) Advising the Company on the public market for Company's securities
and the timing and structure of any future public offering or private placement
of its equity securities.
4. COVENANTS OF THE COMPANY.
(a) The Company agrees that for a period of twelve months from the
date hereof, it shall non-exclusively use the investment banking services of
Consultant. Should the Consultant perform any services related to raising equity
capital, mezzanine financing or debt on behalf of the Company, the Company will
execute the Consultant's standard Selling Agreement related to any such
offering, which shall include a commission to Consultant and warrant coverage as
is standard for the Consultant, in addition to any other fees as may be set
forth herein.
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(b) If (but without any obligation to do so) at any time during the
two (2) year period commencing on the issue date of the Securities, the Company
proposes to register any of its securities in connection with the public
offering of such securities solely for cash (other than a registration on Form
X-0, Xxxx X-0 or any form which does not include substantially the same
information as would be required to be included in a registration statement
covering the sale of the Registrable Securities), the Company shall, each such
time, promptly give the Consultant written notice of such registration. Upon the
written request of the Consultant given within twenty (20) days after receipt of
such written notice from the Company, the Company shall cause to be registered
all of the Registrable Securities that the Consultant has requested to be
registered; and provided further, however, that the Registrable Securities shall
be subject to restrictions on transfer for forty-five (45) days after the
effective date of the subject registration statement. In the event the
Registrable Securities are not declared effective by the Securities and Exchange
Commission within 60 days of the request by the Consultant to the Company to
cause such registration, then in addition to any other rights available to the
Consultant: (x) the Company shall pay to the Consultant an amount in cash, as
partial liquidated damages and not as a penalty, equal to $15,000 (which remedy
shall not be exclusive of any other remedies available under this Agreement);
and (y) on each monthly anniversary thereafter, until the securities are
registered, the Company shall pay to the Consultant an amount in cash, as
partial liquidated damages and not as a penalty, equal to $15,000 per month.
5. CONSULTANT'S RELATIONSHIPS WITH OTHERS. The Company acknowledges that
the Consultant or its affiliates is in the business of providing financial,
investment banking and merger/acquisition services and consulting advice (of all
types contemplated by this Agreement) to others.
6. CONFIDENTIAL INFORMATION. In connection with the rendering of services
hereunder, Consultant has been or will be furnished with confidential
information concerning the Company including, but not limited to, financial
statements and information, cost and expense data, production data, trade
secrets, marketing and customer data, and such other information not generally
obtained from public or published information or trade sources. Such information
shall be deemed "Confidential Material" and, except as specifically provided
herein, shall not be disclosed by Consultant without prior written consent of
the Company. In the event Consultant is required by applicable law or legal
process to disclose any of the Confidential Material, it is agreed that
Consultant will deliver to the Company prompt notice of such requirement prior
to disclosure of same to permit the Company to seek an appropriate protective
order and/or waive compliance of this provision. If, in the absence of a
protective order or receipt of written waiver, Consultant is nonetheless, in the
written opinion of counsel, compelled to disclose any Confidential Material,
Consultant may do so without liability hereunder provided that notice of such
prospective disclosure is delivered to the Company prior to actual disclosure.
Following the termination of this Agreement and a written request by the
Company, Consultant shall deliver to the Company all Confidential Material. This
provision shall survive the termination of this Agreement for any reason.
7. CONSULTANT'S LIABILITY & INDEMNIFICATION OF CONSULTANT BY COMPANY. In
the event that the Consultant or any of its officers, directors, partners,
employees, agents, representatives
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or stockholders (together, the "Indemnified Parties", and individually, the
"Indemnified Party") becomes involved in any capacity in any claim, action,
proceeding or investigation brought by or against any person in connection with
any matter referred to herein or relating to the services provided under this
Agreement, the Consultant shall provide the Company with written notice thereof
as soon as reasonably possible and in any event within thirty (30) days of the
Consultant's notification or other knowledge of the same and the Company shall
be obligated to: (a) reimburse the Indemnified Party for its legal and other
expenses (including the cost of any investigation and preparation) incurred in
connection therewith; and (b) shall be obligated to indemnify the Indemnified
Party against any losses, claims, damages, liabilities, alleged damages or
alleged liabilities, to which the Indemnified Party may become subject in
connection with any matter referred to in this letter, except to the extent that
any such legal or other expense, loss, claim, damage, liability, alleged damage
or alleged liability results from the recklessness or bad faith of the
Consultant in performing the services which are the subject of this letter;
provided, however, that the Company shall have the right, at its own expense, to
undertake the defense of any such action, claim or demand, utilizing counsel
selected by the Consultant; and provided further, that the Company shall have
notified the Consultant in writing of its intention to undertake such defense
within thirty (30) days of receiving the Consultant's notice required herein. In
the absence of recklessness or willful misconduct on the part of Consultant or
Consultant's material breach of this Agreement, no Indemnified Party shall be
liable to the Company or to any officer, director, control person, affiliate,
employee, agent, representative, stockholder or creditor of the Company for any
action or omission of Consultant or any of its officers, directors, employees,
agents, representatives or stockholders in the course of, or in connection with,
rendering or performing any services hereunder.
8. TERMINATION. This Agreement may be terminated at any time during the
Engagement Period by Consultant upon five (5) days prior written notice to the
Company, in the event that Consultant becomes aware of (i) any change in the
business or operations of the Company which Consultant reasonably believes may
adversely affect Consultant's ability to render the services contemplated
hereunder, (ii) any material misrepresentation by the Company with respect to
the business operations, assets, condition (financial or otherwise), results of
operations or prospects of the Company, or (iii) any breach by the Company of
its obligations under this Agreement, which remain uncured for a period of
fifteen days after written notice of the breach is provided to the Company.
This Agreement may be terminated by Company only in the event of a material
breach by Consultant of its obligations hereunder, which breach remains uncured
for a period of fifteen days after written notice of the breach and opportunity
to cure is provided to Consultant.
In the event of termination (i) this Agreement shall become void, without
liability on the part of either party or their affiliates, directors, officers
or stockholders except as set forth in Section 7(a) above, and (ii) Consultant
shall be entitled to expenses it has incurred pursuant to this Agreement up to
the date of such termination; and (iii) all provisions contained in section 6
above survive the termination.
9. EXPENSES. The Company, subject to prior written approval by the Company
for any amount in excess of $500, and upon receipt of appropriate supporting
documentation, shall reimburse the Consultant and/or any other party retained by
the Consultant, for any and all
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reasonable out-of-pocket expenses incurred in connection with services provided
to the Company including but not limited to legal, travel, lodging and meals,
entertainment, postage, photocopying and long distance telephone expenses. The
Company shall reimburse the Consultant within 15 days of receipt of supporting
documentation. The Company hereby acknowledges that unless otherwise
specifically stated herein, that neither Consultant, nor its directors,
employees or agents is responsible for any fees or commissions payable now or in
the future to any finder or to any other financial or other advisor utilized or
retained by the Company. The Consultant acknowledges that as of the date of this
Agreement, the Consultant is not due any funds from the Company.
10. SALES OR DISTRIBUTIONS OF SECURITIES. If the Consultant assists the
Company in the sale or distribution of securities, the Consultant shall receive
fees and other forms of compensation as agreed to by the Company and the
Consultant. Such public offering or private placement, undertaken by the
Consultant on behalf of the Company, shall be subject to an additional agreement
to be executed by the parties hereto at such time as is appropriate.
11. LIMITATION UPON THE USE OF ADVICE AND SERVICES.
(a) No person or entity, other than the Company or any of its
subsidiaries or directors or officers of each of the foregoing, shall be
entitled to make use of or rely upon the advice of the Consultant to be given
hereunder, and the Company shall not transmit such advice to, or encourage or
facilitate the use or reliance upon such advice by others without the prior
consent of the Consultant.
(b) Company hereby acknowledges that Consultant, for services rendered
under this Agreement, makes no commitment whatsoever to recommend or advise its
clients to purchase the securities of the Company. Research reports that may be
prepared by Consultant will, when and if prepared, be based solely on the
merits, and independent judgment of analysts of the Consultant.
(c) Company hereby acknowledges that Consultant, for services rendered
under this Agreement, makes no commitment whatsoever to make a market in any of
the Company's securities on any stock exchange or in any electronic marketplace.
Any decision by Consultant to make a market in any of the Company's securities
shall be based solely on the independent judgment of Consultant's traders and
related supervisory personnel.
(d) Use of the Consultant's name in annual reports or any other report
of the Company or releases by the Company require the prior approval of the
Consultant unless the Company is required by law to include Consultant's name in
such annual reports, other report or release of the Company, in which event the
Company shall furnish to Consultant copies of such annual reports or other
reports or releases using Consultant's name in advance of publication by the
Company, its affiliates or assigns.
12. DISCRETION. Nothing contained herein shall require the Company to enter
into any transaction presented to it by Consultant, which decision shall be at
the Company's sole discretion.
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13. SEVERABILITY. Any term or provision of this Agreement which is invalid
or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
14. MISCELLANEOUS
(a) Any notice or other communication between parties hereto shall be
sufficiently given if sent by certified or registered mail, postage prepaid, or
faxed and confirmed if to the Company, addressed to the Company at the address
listed in the Preamble or if to the Consultant, addressed to Xxxxx Xxxxxxxxx,
Xxxxxx Xxxxx Securities, 000 Xxxxx Xxxxxxx Xxxxxxx, 0xx Xxxxx, Xxxx Xxxxx, XX
00000. Such notice or other communication shall be deemed to be given on the
date of receipt.
(b) If the Consultant shall cease to do business, the provisions
hereof relating to duties of the Consultant and compensation by the Company as
it applies to the Consultant shall thereupon cease to be in effect.
(c) This Agreement embodies the entire agreement and understanding
between the Company and the Consultant and supersedes any and all negotiations,
prior discussions and preliminary and prior agreements and understandings
related to the central subject matter hereof.
(d) This agreement has been duly authorized, executed and delivered by
and on behalf of the Company and the Consultant.
(e) This Agreement shall be construed and interpreted in accordance
with the laws of the State of Florida, without giving effect to its rules
regarding conflicts of laws. The parties hereby consent to the exclusive
jurisdiction of the state and federal courts located in Palm Beach County, FL
for all claims and controversies arising under this agreement.
(f) There is no relationship of partnership, agency, employment,
franchise or joint venture between the parties. Neither party has the authority
to bind the other or incur any obligation on its behalf.
(g) The Company hereby acknowledges that Consultant is not a fiduciary
of the Company and that Consultant makes no representations or warranties
regarding Company's ability to secure financing, whether now or in the future.
(h) This Agreement and the rights hereunder may not be assigned by
Company without the prior written consent of Consultant. This Agreement may not
be assigned by Consultant, in whole of in part, without prior consent of
Company. This Agreement shall be binding upon and inure to the benefit of the
parties and their respective successors, assigns and legal representatives.
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(i) In the event the Company breaches any covenant hereunder and the
Consultant is required to seek enforcement of this Agreement, the Company shall
be responsible to reimburse the Consultant any and all legal fees and costs
related to such enforcement action.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date hereof.
PERFORMANCE HEALTH TECHNOLOGIES, INC.
/s/ Xxxxxx Xxxxxxxx
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Name: Xxxxxx Xxxxxxxx
Title: President and CEO
XXXXXX XXXXX SECURITIES
/s/ Xxxxxx X. Xxxxxx
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Name: Xxxxxx X. Xxxxxx
Title: President
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