Exhibit 10.42
Xxxxxxx/Xxxxxx Associates, L.P.
00 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
March 3, 1998
The Board of Directors
NuWave Technologies, Inc.
Xxx Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: Xx. Xxxxxx Xxxxx, Chairman/President/CEO
Dear Xx. Xxxxx:
This letter, when executed by the parties hereto, will constitute an
agreement between Nuwave Technologies, Inc. (the "Company") and Xxxxxxx/Xxxxxx
Associates L.P. ("Xxxxxxx/Xxxxxx") pursuant to which the Company agrees to
retain Xxxxxxx/Xxxxxx and Xxxxxxx/Xxxxxx agrees to be retained by the Company
under the terms and conditions set forth below.
1. The Company hereby retains Xxxxxxx/Xxxxxx to perform consulting
services related to corporate finance and other financial services matters,
including introducing the Company to the financial and stock brokerage
community, and Xxxxxxx/Xxxxxx hereby accepts such retention. The services which
Xxxxxxx/Xxxxxx will perform shall include, without limitation, assisting the
Company in raising additional capital, including the solicitation of the holders
of the Company's warrants, issued in July 1996 as part of its IPO, to exercise
such warrants, subject (a) to compliance with applicable law and the rules of
the NASD and (b) payment of a 5% soliciting fee to Xxxxxxx/Xxxxxx provided that
such fee shall be paid only if the Company requests Xxxxxxx/Xxxxxx to assist it
in soliciting the Warrant holders. In this regard, subject to the terms set
forth below, Xxxxxxx/Xxxxxx shall furnish to the Company advice and
recommendations with respect to such aspects of the business and affairs of the
Company as the Company shall, from time to time, reasonably request upon
reasonable notice. In addition, Xxxxxxx/Xxxxxx shall hold itself ready to assist
the Company in evaluating and negotiating particular contracts or transactions,
if requested to do so by the Company, upon reasonable notice.
2. As compensation for the services described in paragraph 1 above,
the Company shall pay to Xxxxxxx/Xxxxxx a fee of $5,000 per month during an
initial term (the "Initial Term") ending 18 months from the date hereof,
subject to automatic extension for successive one-year terms (the "Additional
Terms") unless either the Company or Xxxxxxx/Xxxxxx shall have given written
notice of termination at least 30 days prior to the expiration of the Initial
Term or the Additional Terms (the Initial Term and the Additional Terms are
hereinafter collectively called the "Term"). The Company hereby issues to
Xxxxxxx/Xxxxxx (or its designated affiliates) upon the execution of this
agreement, 400,000 common stock purchase warrants (the "Warrants"). The Warrants
will expire five years after the date hereof and will be exercisable at the
current market price per share, after 18 months from the date hereof, at an
exercise price of $4.00 per share. The Warrants may be exercised as to all or a
lesser number of shares and will contain provisions for registration of the
resale of the underlying shares at the Company's expense, cashless exercise and
for adjustment in the number of such shares and the exercise price to prevent
dilution. The Warrants will have one demand registration right exercisable after
18 months from the date hereof and the piggyback rights, both of which are
specified in the form of Warrant. The issuance of the Warrants is irrevocable
and the Warrants have been fully earned on execution of this Letter Agreement.
In addition to its compensation hereunder, the Company will reimburse
Xxxxxxx/Xxxxxx for any and all reasonable expenses incurred by Xxxxxxx/Xxxxxx in
the performance of its duties to the Company and shall furnish the Company with
appropriate supporting documentation; provided, however, that any expense in
excess of $1,000 shall require the prior written approval of the Company, which
will not be unreasonably withheld. Such reimbursement shall accumulate and be
paid monthly. Nothing contained herein shall prohibit Xxxxxxx/Xxxxxx from
receiving any additional compensation under paragraphs 3 and 4 herein or
otherwise.
3. If during the Term the Company intends to raise equity or debt
financing, it shall first discuss with Xxxxxxx/Xxxxxx the terms, if any, upon
which Xxxxxxx/Xxxxxx is prepared to raise such capital for the Company. If the
Company and Xxxxxxx/Xxxxxx are unable to reach agreement upon such terms, the
Company shall be free to engage another securities firm to raise equity capital
for the Company, provided that Xxxxxxx/Xxxxxx shall have 20 business days after
receipt of notice from the Company of the terms upon which such other securities
firm proposes to raise equity capital for the Company to commit to raise such
equity capital on the same or more favorable terms for the Company. If
Xxxxxxx/Xxxxxx and the Company shall have failed to reach agreement prior to the
expiration of such 20 business day period then Xxxxxxx/Xxxxxx shall have no
further claim or right with respect to the financing of the proposal contained
in such notice from the Company. If, however, the terms of such proposal are
subsequently modified in any material respect, the preferential right
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referred to herein shall apply to such modified proposal as if the original
proposal had not been made. Xxxxxxx/Xxxxxx' failure to exercise its preferential
right with respect to any particular proposal shall not affect its preferential
rights relative to future proposals.
4. In addition, Xxxxxxx/Xxxxx shall hold itself ready to assist the
Company in evaluating and negotiating particular contracts or transactions, if
requested to do so by the Company, upon reasonable notice, and will undertake
such evaluations and negotiations upon prior written agreement as to additional
compensation to be paid by the Company to Xxxxxxx/Xxxxxx with respect to such
evaluations and negotiations. Nothing herein shall require the Company to
utilize Xxxxxxx/Xxxxxx' services in any particular transactions nor shall it
limit the Company's obligations arising under any other agreement or
understanding.
5. The Company and Xxxxxxx/Xxxxxx further acknowledge and agree that
Xxxxxxx/Xxxxxx may act as a finder or financial consultant in various business
transactions in which the Company may be involved, which involves (i) a transfer
of control, including without limitation, a merger, a sale of assets, a sale of
stock, a tender offer, or (ii) an acquisition by the Company of another business
or an agreement for a joint venture with a third-party ("M&A Transactions"). The
Company hereby agrees that in the event Xxxxxxx/Xxxxxx shall introduce to the
Company another party or entity, and that as a result of such introduction, an
M&A Transaction is consummated, the Company shall pay to Xxxxxxx/Xxxxxx a fee of
five (5%) percent of the first $5,000,000 and two and one-half (2-1/2%) percent
of the amount over $5,000,000 of the consideration paid or received by the
Company (or by any subsidiary or affiliated entity of the Company) in such M&A
Transaction consummated by the Company or any subsidiary or affiliated entity of
the Company. Such fee shall be paid in cash at the closing of the M&A
Transaction to which it relates, and shall be payable whether or not the M&A
Transaction involves stock, or a combination of stock and cash, or is made on
the installment sale basis. In addition, if the Company shall, within 12 months
immediately following the termination of this Agreement, consummate an M&A
Transaction with any party first introduced by Xxxxxxx/Xxxxxx to the Company
prior to such termination, the Company shall pay to Xxxxxxx/Xxxxxx a fee with
respect to such M&A Transaction calculated in accordance with this paragraph.
Nothing contained herein shall obligate the Company to enter into any M&A
Transaction proposed by Xxxxxxx/Xxxxxx or to obligate the Company to pay
Xxxxxxx/Xxxxxx a fee on an M&A Transaction introduced to the Company by a
third-party.
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6. All obligations of Xxxxxxx/Xxxxxx contained herein shall be
subject to Xxxxxxx/Xxxxxx' reasonable availability for such performance, in view
of the nature of the requested service and the amount of notice received.
Xxxxxxx/Xxxxxx shall devote such time and effort to the performance of its
duties hereunder as Xxxxxxx/Xxxxxx shall determine is reasonably necessary for
such performance. Xxxxxxx/Xxxxxx may look to such others for such factual
information, investment recommendations, economic advice and/or research, upon
which to base its advice to the Company hereunder, as it shall deem appropriate.
The Company shall furnish to Xxxxxxx/Xxxxxx all information reasonably relevant
and properly disclosable to the performance by Xxxxxxx/Xxxxxx of its obligations
under this Agreement, or particular projects as to which Xxxxxxx/Xxxxxx is
acting as advisor, which will permit Xxxxxxx/Xxxxxx to know all facts material
to the advice to be rendered, and all material or information reasonably
requested by Xxxxxxx/Xxxxxx. In the event that the Company fails or refuses to
furnish any such material or information reasonably requested by Xxxxxxx/Xxxxxx,
and thus prevent or impede Xxxxxxx/Xxxxxx' performance hereunder, any inability
of Xxxxxxx/Xxxxxx to perform shall not be a breach of its obligations hereunder.
7. Nothing contained in this Agreement shall limit or restrict the
right of Xxxxxxx/Xxxxxx or of any partner, employee, agent or representative of
Xxxxxxx/Xxxxxx, 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, nor to limit or restrict the right of Xxxxxxx/Xxxxxx to render
services of any kind to any other corporation, firm, individual or association.
8. Xxxxxxx/Xxxxxx will hold in confidence any confidential
information which the Company provides to Xxxxxxx/Xxxxxx pursuant to this
Agreement unless the Company gives Xxxxxxx/Xxxxxx permission in writing to
disclose such confidential information to a specific third party. In addition,
all confidential information which the Company provided to Xxxxxxx/Xxxxxx in
connection with any prior or ongoing offering shall be considered confidential
information for purposes of this Agreement. Notwithstanding the foregoing,
Xxxxxxx/Xxxxxx shall not be required to maintain confidentiality with respect to
information (i) which is or becomes part of the public domain; (i) of which it
had independent knowledge prior to disclosure; (iii) which comes into the
possession of Xxxxxxx/Xxxxxx in the normal and routine course of its own
business from and through independent non-confidential sources; or (iv) which is
required to be disclosed by Xxxxxxx/Xxxxxx by governmental requirements. If
Xxxxxxx/Xxxxx is requested or required (by oral questions, interrogatories,
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requests for information or document subpoenas, civil investigative demands, or
similar process) to disclose any confidential information supplied to it by the
Company, or the existence of other negotiations in the course of its dealings
with the Company or its representatives, Xxxxxxx/Xxxxxx shall, unless prohibited
by law, promptly notify the Company of such request(s) so that the Company may
seek an appropriate protective order.
9. The Company agrees to indemnify Xxxxxxx/Xxxxxx pursuant to the
terms of the Indemnification Agreement, a copy of which is attached hereto as
Exhibit A (the "Indemnification Agreement").
10. This Agreement may not be transferred, assigned or delegated by
any of the parties hereto without the prior written consent of the other party
hereto.
11. The failure or neglect of the parties hereto to insist, in any
one or more instances, upon the strict performance of any of the terms or
conditions of this Agreement, or their waiver 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.
12. Paragraphs 5 and 8 and the Indemnification Agreement shall
survive the expiration or termination of this Agreement under all circumstances.
13. Any notices hereunder shall be sent to the Company and to
Xxxxxxx/Xxxxxx at their respective addresses set forth above, with copies to:
Dechert Price & Xxxxxx
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
and
Xxxxxxxxx & Xxxxxxx, LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxxx, Esq.
Any notice shall be given by fax or registered or certified
mail, postage prepaid. Either party may designate any other address to which
notice shall
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be given, by giving written notice to the other of such change of address in the
manner herein provided.
14. This Agreement has been made in the State of New York and shall
be construed and governed in accordance with the laws thereof without giving
effect to principles governing conflicts of law. Any dispute arising under this
Agreement shall be submitted for arbitration to the American Arbitration
Association in New York, New York, provided that any claim for equitable relief
which cannot be obtained by arbitration may be brought before the United States
District Court for the Southern District of New York or the New York Supreme
Court, New York County.
15. This Agreement contains the entire agreement between the
parties, may not be altered or modified, except in writing and signed by the
party to be charged thereby, and supersedes any and all previous agreements
between the parties relating to the subject matter hereof.
16. This Agreement shall be binding upon the parties hereto, the
indemnified parties referred to in the Indemnification Agreement, and their
respective heirs, administrators, successors and permitted assigns.
If you are in agreement with the foregoing, please execute two
copies of this letter in the space provided below and return them to the
undersigned.
Very truly yours,
XXXXXXX/XXXXXX ASSOCIATES L.P.
By XXXXXXX/XXXXXX CORP., General Partner
By: /s/ Xxxxx Xxxxxx
------------------------------------
Xxxxx Xxxxxx
Executive Vice President
ACCEPTED AND AGREED TO AS OF
THE DATE FIRST ABOVE WRITTEN
NuWave Technologies, Inc.
By: /s/ Xxxxxx Xxxxx
------------------------
Name: Xxxxxx Xxxxx
Title: President
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