1
EXHIBIT 10.3
[LSC ASSOCIATES, LLC LETTERHEAD]
Wednesday, June 20, 2001
Xx. Xxxxxx Xxxxxxx, President
Xx. Xxxxx Xxxxxxx, Vice President
Whitehall Limited, Inc.
000 Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxx 00000
RE: ENGAGEMENT AGREEMENT
Gentlemen:
On the basis of previous telephone conversations and meetings between
Whitehall Limited, Inc., a Florida Corporation, (hereinafter referred to as
"WHI") and LSC Associates, LLC., a Texas Limited Liability Company (hereinafter
referred to as "LSC") (collectively sometimes referred to as the "Parties" and
individually sometimes referred to as "Each Party") as well as other
discussions, initial reports submitted by WHI, and the representations that
WHI has made to LSC describing WHI and its principals, present and proposed
business activities, operations, financial condition and capital structure,
and various agreements and documents related thereto, LSC and WHI hereby enter
into the following agreement.
Whereas LSC is engaged in business as a business consultant with an
emphasis on arranging financing and pursuing business combinations for its
clients, which business combinations may include an initial public offering,
merger, acquisition, joint venture, financing restructuring, licensing
agreement, and/or other transactions; and
Whereas WHI desires to utilize the services of LSC pursuant to the terms
of this Agreement.
It is therefore agreed by the parties as follows:
1. ENGAGEMENT
WHI hereby engages and retains LSC as a Business Consultant for and on
behalf of WHI and its Affiliates to perform the Services (as that term is
hereinafter defined) and LSC hereby accepts such appointment on the terms
and subject to the conditions hereinafter set forth and agrees to use its
best efforts in providing such Services.
2
II. SERVICES
X. Xx XXX's Business Consultant, LSC agrees to provide the following
consulting services (collectively the "Services"):
1. Xxxxxx XXX in its negotiations with candidates who may have an
interest in pursuing a form of business combination with WHI.
2. Advise and perform consulting services regarding WHI's
management in corporate finance matters, including structuring
the nature, extent, and other parameters of any transaction
involving a candidate(s).
3. Conduct corporate-related due diligence concerning WHI in
connection with the anticipated Services to be rendered under
this Agreement.
4. Advice WHI's management in evaluating proposals and
participating in negotiations with candidate(s).
5. Consult WHI in efforts to establish strategic relationships with
individuals and entities of particular interest to it in
connection with its continued business development.
6. Provide management consulting and due diligence services
specifically in completing the current Investor Package
Documentation (i.e. Business Plan, Presentations, Financial
Modeling, Financial Projections and Marketing Analysis) and
provide ongoing editing and management of this documentation to
reflect future changes in the Company and/or its business model.
B. LSC shall devote such time and best efforts to the affairs of WHI as
is reasonable and adequate to render the Services contemplated by
this Agreement. LSC is not responsible for the performance of any
services that may be rendered hereunder without WHI providing the
necessary information in writing prior hereto, nor shall LSC include
any services that constitute the rendering of any legal opinions or
performance of work that is in the ordinary purview of the Certified
Public Accountant. LSC cannot guarantee results on behalf of WHI, but
shall pursue all reasonable avenues available through its network of
contacts. At such time as an interest is expressed by a third party
in WHI's needs, LSC shall notify WHI and advise it as to the source
of such interest and any terms and conditions of such interest. The
acceptance and consumption of any transaction is subject to
acceptance of the terms and conditions by WHI. It is understood that
a portion of the compensation paid hereunder is being paid by WHI to
have LSC remain available to advise it on transactions on an
as-needed basis.
III. EXPENSES
It is expressly agreed and understood that LSC's compensation as provided
in this Agreement shall also include reimbursement of normal and
reasonable out-of-pocket expenses incurred by LSC, which expenses (as
described below) shall be
Page 2 of 8
3
pre-approved by WHI. The expenses described in this paragraph shall be
reimbursed by WHI independent of any fees described in the section below
titled, "COMPENSATION".
A. "Normal and reasonable out-of-pocket expenses" shall include but are
not limited to: accounting, long distance communication, express mail,
outside consultants, travel (including: travel, hotel lodging and
meals, transportation, etc.), and other costs involved in the
performance of LSC's Services under this Agreement.
X. XXX acknowledges that it may be necessary to hire certain
professionals on a temporary or contract basis and WHI agrees that it
may be necessary to pay those professionals separately from this
Agreement at agreed upon rates. The current market value of those
services may range from $500 to $1,500 per day depending on the
expertise needed. WHI must pre-approve the engagement of any such
professionals in writing. Provided WHI has given its pre-approval,
such fees are payable immediately upon the initial receipt of an
invoice by WHI.
X. XXX also agrees to pay its own and LSC's legal expenses in connection
with LSC's services under this Agreement, and
X. XXX hereby agrees to compensate LSC promptly upon receipt of an
expense invoice from LSC. Whenever feasible, LSC will request advance
payment of approved expenses. The reimbursement for expenses shall not
be subject to any maximum allocation, and shall be fully reimbursed.
E. LSC shall not incur any expenses without WHI's prior written consent,
which consent shall not unreasonably be withheld.
IV. COMPENSATION
In consideration for the Services, XXX agrees that LSC shall be entitled to
compensation as follows:
A. Retainer and Advisory Fees
1. For market positioning, corporate governance, strategic planning
and other business consulting work to be accomplished, WHI shall
pay to LSC, in advance, a retainer of four thousand ($4,000)
dollars. The retainer shall be due and payable upon execution of
the Agreement.
2. LSC shall xxxx XXX at a rate of two hundred and twenty five
($225.00) dollars per hour for advisory services provided as
specified in this Agreement.
3. The Advisory Fees are exclusive of other compensation and
reimbursable pre-approved expenses as provided in this Agreement.
B. Private Placement Memorandum
1. WHI shall pay to LSC, in advance, an advisory fee of fifteen
thousand ($15,000) dollars for the creation and production of a
Private
Page 3 of 8
4
hPlacement Memorandum (PPM). LSC shall provide 50 completed PPMs to
WHI. LSC shall incur all printing and production costs associated with
the creation of the PPMs.
C. Success Fee
1. Upon the successful completion of a joint venture partnership for Real
Estate Development between WHI and a candidate introduced to WHI by
any of the entities, affiliations, or persons LSC, its employees or
former employees, agents, representatives, advisors, or consultants
introduces to WHI and/or its Affiliates, WHI will pay a finder's fee
in cash equal to five percent (5%) of the total gross equity proceeds
or value of such transactions.
2. Upon the successful completion of a joint venture partnership for Real
Estate Development between WHI and a candidate introduced to WHI by
any of the entities, affiliations, or persons LSC, its employees or
former employees, agents, representatives, advisors, or consultants
introduces to WHI and/or its Affiliates, 178,920 of WHI's issued and
outstanding equity securities shall be issued to LSC.
3. Once exercised, the shares issued under this Section shall be deemed
fully earned and shall have all the same rights and all the same
anti-dilutive provisions as the "Founder's Securities" held by the
original shareholders.
4. LSC shall have "Piggyback Registration Rights" to register the shares
as part of any registration filing by WHI and/or its successors and
assigns.
5. If required by applicable law, or at the election of LSC, the Success
Fees will be deemed to have been earned by and paid in a timely manner
to a placement agent selected exclusively by LSC.
V. REPRESENTATIONS, WARRANTS AND COVENANTS
A. EXECUTION. The execution, delivery and performance of this Agreement,
in the time and manner herein specified, will not conflict with,
result in a breach of, constitute a default under any existing
agreement, indenture, or other instrument to which either WHI or LSC
is a party or by which either entity may be bound or affected.
B. NON-CIRCUMVENTION. WHI hereby irrevocably agrees not to circumvent,
avoid, bypass, or obviate, directly or indirectly, the intent of this
Agreement, including avoiding payment of fees or other compensation to
LSC or its affiliates in connection with any transaction involving any
corporation, partnership, individual, or other entity introduced by
LSC to WHI. This provision shall be liberally construed in favor of
LSC and shall apply to all transactions between WHI and LSC.
Page 4 of 8
5
C. TIMELY APPRISALS. WHI shall keep LSC up to date and apprised of all
business market and legal developments related to WHI and its
operations and management.
1. Accordingly, WHI shall provide LSC with copies of all
amendments, revisions and changes to its business and
marketing plans, bylaws, articles of incorporation, private
placement memoranda, key contracts, employment and consulting
agreements and other operational agreements.
2. WHI shall promptly notify LSC of the threat or filing of any
suit, arbitration or administrative action, injunction, lien,
claim or complaint and promptly forward a copy of all related
documentation directly to LSC, or at LSC's direction, to
LSC's counsel.
3. WHI shall promptly notify LSC of all new contracts,
agreements, joint ventures or filing with any state, federal
or local administrative agency, including without limitation
the SEC, NASD, or any state agency, and shall provide all
related documents, including copies of the exact documents
filed, to LSC, including, without limitation, all annual
reports, quarterly reports and notices of change of events,
and registration statements filed with the SEC and any state
agency, directly to LSC.
4. WHI shall also provide directly to LSC current financial
statements, including balance sheets, income statements, cash
flows, and all other documents provided or generated by WHI
in the normal course of its business and requested by LSC
from time to time.
5. LSC shall keep all documents and information confidential as
described in the section below titled, "CONFIDENTIAL DATA".
D. CORPORATE AUTHORITY. Both WHI and LSC have full legal authority to
enter into this Agreement and to perform the same in the time and
manner contemplated.
E. AUTHORIZED SIGNATURES. The individuals whose signatures appear
below are authorized to sign this Agreement on behalf of their
respective corporations.
F. COOPERATION. WHI will cooperate with LSC, and will promptly provide
LSC with all pertinent materials and requested information in order
for LSC to perform its Services pursuant to this Agreement.
G. SERVICE PROVIDED. WHI acknowledges and understands that LSC is
neither a broker/dealer nor a Registered Investment Advisor.
H. PROPER NOTIFICATION OF MATERIAL OCCURRENCES. Until the proper
termination of this engagement (as outlined in the section below
titled, "TERM AND TERMINATION"), WHI will notify LSC promptly of
the occurrence of any event, which might materially affect the
condition (financial or otherwise) or prospects of WHI.
VI. TERM AND TERMINATION
A. This Agreement shall be effective upon its execution and shall
remain in effect for a period of one (1) year unless otherwise
terminated as provided in this Section VI.
Page 5 of 8
6
B. WHI shall have the right to terminate LSC's engagement hereunder by
furnishing LSC at least thirty (30) days' advance written notice of
such termination. Upon receipt of such written notice, this Agreement
will then terminate on the last day of the next full calendar month
following the receipt of notice.
C. Notwithstanding the foregoing, no termination of this Agreement by WHI
shall in any way affect LSC's right to receive:
1. reimbursement for billed, accrued and/or unbilled disbursements.
2. fees which have been earned by LSC through the effective date of
termination.
VII. CONFIDENTIAL DATA
A. Except for its employees, agents and independent contractors, LSC
shall not divulge to others, any trade secret or confidential
information, knowledge, or data concerning or pertaining to the
business affairs of WHI, obtained by LSC as a result of its engagement
hereunder, unless authorized, in writing by WHI.
B. Except for its employees, agents and independent contractors, WHI
shall not divulge to others, trade secret or confidential information,
knowledge, or data concerning or pertaining to the business and
affairs of LSC, obtained by WHI as a result of its engagement
hereunder, unless authorized, in writing, by LSC.
C. LSC shall not be required in the performance of its duties to divulge
to WHI or any officer, director, agent or employees of WHI, any secret
or confidential information, knowledge, or data concerning any other
person, firm or entity (including, but not limited to, any such
persons, firm or entity which may be a competitor or potential
competitor of WHI) which LSC may have or be able to obtain otherwise
than as a result of the relationship established by this Agreement.
VIII. OTHER MATERIAL TERMS AND CONDITIONS
A. CONSEQUENTIAL DAMAGES. Except as expressly provided herein, LSC shall
not, by reason of the termination of this Agreement or otherwise, be
liable to WHI for any special, incidental, consequential or punitive
damages such as, but not limited to, expenditures, investments or
commitments made in connection with the efforts by WHI to acquire
another entity or sell all or a portion of its equity to another
entity.
B. PROVISIONS. Neither termination nor completion of this Agreement shall
affect the provisions of this Agreement, and the Indemnification
Provisions that are incorporated herein, both of which shall survive
this Agreement and remain operative and in full force and effect.
C. ADDITIONAL INSTRUMENTS. Each of the parties shall from time to time,
at the request of others, execute, acknowledge and deliver to the
other party any and all further instruments that may be reasonably
required to give full effect and force to the provisions of this
Agreement.
Page 6 of 8
7
D. ENTIRE AGREEMENT. Each of the parties hereby covenants that this
Agreement is intended to and does contain and embody herein all of
the understandings and Agreements, both written and oral, of the
parties hereby with respect to the subject matter of this Agreement,
and that there exists no oral agreements or understanding expressed
or implied liability, whereby the absolute, final and unconditional
character and nature of this Agreement shall be in any way
invalidated, empowered or affected. There are no representations,
warranties, or covenants other than those set forth herein.
E. LAWS OF THE STATE OF ILLINOIS. This Agreement shall be deemed to made
in, governed by and interpreted under and construed in all respects
in accordance with the laws of the State of Illinois. In the event of
controversy arising out the interpretation, construction,
performance, or breach of this Agreement, the parties hereby agree
and consent to the jurisdiction and venue of the District or County
Court of Cook County, Illinois.
F. SUCCESSORS AND ASSIGNS. The benefits of the Agreement shall inure to
the respective successors and assigns of the parties hereto and of
the indemnified parties hereunder and their successors and assigns
and representatives, and the obligations and liabilities assumed in
this Agreement by the parties hereto shall be binding upon their
respective successors and assigns: provided that the rights and
obligations of WHI under this Agreement may not be assigned or
delegated without prior written consent of LSC, and any such
purported assignment shall be null and void. Notwithstanding the
forgoing, LSC may assign or delegate its obligations and rights
under this Agreement upon five (5) days written notice, to another
investment banking/business consulting firm of its choice in its sole
discretion.
G. ORIGINALS. This Agreement may be executed in any number of
counterparts, each of which so executed shall be deemed an original
and constitute one and the same Agreement. Facsimile copies with
signatures shall be given the same legal effect as an original.
X. ADDRESSES OF PARTIES. Each party shall at all times keep the other
informed of its principal place of business if different from that
stated herein, and shall promptly notify the other of any change,
giving the address of the new place of business or residence.
I. MODIFICATION OR WAIVER. A modification or waiver of any of the
provisions of this Agreement shall be effective only if made in
writing and executed with the same formality as this Agreement. The
failure of any party to insist upon strict performance of any of the
provisions of this Agreement shall not be construed as a waiver of
any subsequent default of the same or similar nature or of any other
nature.
X. ATTORNEY'S FEES. If any arbitration, litigation, action, suit, or
other proceeding is instituted to remedy, prevent or obtain relief
from a breach of this Agreement, in relation to a breach of this
Agreement or pertaining to a declaration of rights under this
Agreement, the prevailing party will recover all such party's
attorneys' fees incurred in each and every such action, suit or other
proceeding, including any and all appeals or petitions therefrom. As
Page 7 of 8
8
used in this Agreement, attorneys' fees will be deemed to be the full
and actual cost of any legal services actually performed in connection
with the matters involved, including those related to any appeal or
the enforcement of any judgment calculated on the basis of the usual
fee charged by attorneys performing such services.
K. NOTICES. All notices that are required to be or may be sent pursuant
to the provisions of this Agreement shall be sent by certified mail,
return receipt requested, or by overnight package delivery service to
each of the parties at the address appearing herein, and shall count
from the date of mailing or the validated air bill.
APPROVED AND AGREED THIS 20TH DAY OF JUNE, 2001.
LSC Associates, LLC. Whitehall Limited, Inc.
000 Xxxxx XxXxxxx Xxxxxx, Xxxxx 000 000 Xxxxxxxx Xxxxxx
Xxxxxxx, XX 00000 Xxxxxxxx, Xxxxxxx 00000
Phone: (000) 000-0000 Phone:
Fax: (000) 000-0000 Fax:
/s/ XXXXXX XXXXXX /s/ XXXXXX XXXXXXX
------------------------ ------------------------
By: Xxxxxx Xxxxxx By: Xxxxxx Xxxxxxx
Its: Director President
Authorized Signature
Page 8 of 8
