EXHIBIT 10.1
FINANCIAL ADVISORY AGREEMENT
This Agreement is made and entered into as of the 6th day of May, 2005, by
and between Xxxxxxx Xxxxxxx & Company Inc. ("CDC") and DTOMI, Inc., (the
"Company").
In consideration of the mutual promises made herein and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. Purpose: The Company hereby engages CDC for the term specified in
Paragraph 2 hereof to render financial advisory services to the Company
upon the terms and conditions set forth herein.
2. Term: Except as otherwise specified in paragraph 4 hereof, this Agreement
shall be effective from May 6, 2005 to May 31, 2006.
3. Duties of CDC: During the term of this Agreement, CDC shall provide the
Company with such regular and customary financial advisory services as is
reasonably requested by the Company, provided that CDC shall not be
required to undertake duties not reasonably within the scope of this
Agreement. It is understood and acknowledged by the parties that the value
of CDC's financial advisory services is not readily quantifiable, and that
although CDC shall be obligated to render the financial advisory services
contemplated by this Agreement upon the reasonable request of the Company,
in good faith, CDC shall not be obligated to spend any specific amount of
time in so doing. CDC's duties may include but will not necessarily be
limited to, providing recommendations concerning the following matters:
a. Rendering financial advisory services with regard to any of the
following corporate finance matters:
i. Changes in the capitalization of the Company;
ii. Changes in the Company's corporate structure;
iii. Redistribution of shareholdings of the Company's stock;
iv. Offerings of securities in public and private transactions;
v. Alternative uses of corporate assets;
vi. Structure and use of debt;
vii. Sales of stock by insiders pursuant to Rule 144 or otherwise;
viii. Counsel management with respect to listing on a National
Exchange; and
ix. Strategic planning for the company.
b. In addition to the foregoing, CDC agrees to furnish financial
advisory services to the Company if requested in connection with (i)
the acquisition of and/or merger with other companies, the sale of
the Company itself, or any of its assets, subsidiaries or
affiliates, or similar type of transaction (hereinafter referred to
as a "Transaction"), and (ii) financings from financial
institutions, including but not limited to lines of credit,
performance bonds, letters of credit, loans or other financings
(hereinafter referred to as a "institutional financing").
4. Compensation: In consideration for the financial advisory services
rendered by CDC to the Company pursuant to this Agreement (and in addition
to the expenses provided for in Paragraph 5 hereof) going forward CDC
shall be compensated as follows:
a. Retainer: The Company agrees to pay CDC 500,000 shares of the
Company's common stock upon execution of this agreement. The stock
shall be issued in the name of CDC or as directed by an officer of
CDC and shall be delivered within seven days of the signing of this
agreement. The shares shall possess "piggy back" registration
rights. If registration covering the sale of the stock is not
effective within one year, the Company agrees to furnish a legal
opinion covering the sale of the stock pursuant to Rule 144.
b. Cash Compensation Pursuant to Arranging Funding: The Company agrees
to compensate CDC in an amount of cash equal to 10% of all cash
received by the Company from the sale of securities or any other
financing arranged by CDC on behalf of the Company. The compensation
will be directed to an account of CDC's choosing directly from
escrow upon closing via federal funds pursuant to written
instructions provided by CDC to the Company. For the purposes of the
Agreement, a "Transaction" shall mean any Funding transaction
originated by CDC, other than in the ordinary course of trade or
business of the Company, other than a merger or acquisition.
c. Equity Compensation Pursuant to Arranging Funding: The Company shall
deliver to CDC a five (5) year Warrant to purchase that number of
shares of the common stock of the Company equal to four percent (4%)
of that number of shares of common stock sold by the Company, at a
purchase price equal to the transaction price upon the successful
completion of any financing arranged by CDC. The Warrant shall be
issued in the name of CDC or as directed by the Chief Executive
Officer of CDC, and shall be delivered within seven days of the
closing of the Transaction. The shares underlying the Warrant shall
possess "piggy back" registration rights to be registered as part of
the next public registration of the Company's stock. In the event of
a debt or institutional financing, the Warrant shall have the same
terms except that the number of shares underlying the Warrant shall
be equal to 4% of the funds received by the Company divided by the
average closing bid price of the common stock of the Company for the
30 days prior to the closing of such debt or institutional
financing.
d. Merger and/or Acquisition. CDC shall be paid a cash fee equal to the
"Double Xxxxxx" formula based on the total value of any Merger
and/or Acquisition transaction on which CDC acts as advisor to the
Company. If the transaction is in total or in part an equity
transaction, the value of the equity portion shall be based on the
average trading price for the preceding 30 days before the closing
of the transaction.
All fees to be paid pursuant to this Agreement, except as otherwise
specified, are due and payable to CDC in cash at the closing or closings
of any transaction specified in Paragraph 4 hereof.
5. Expenses of CDC: In addition to the fees payable hereunder, and regardless
of whether any transaction set forth in Paragraph 4 hereof is proposed or
consummated, the Company shall reimburse CDC for its expenses on a
non-accountable basis in a cash amount equal to three percent (3%) of all
cash received by the Company pursuant to this Agreement. Such cash shall
be payable to CDC in accordance with Section 4(b) hereof. In the event
that CDC is not involved in a cash financing for the Company, the Company
shall reimburse CDC for expenses in the form of a promissory note
convertible into shares of common stock of the Company, with the principal
amount of such note equal to 3% of the market value of any non-cash
financing arranged by CDC pursuant to this agreement. The conversion price
of such promissory note shall be equal to the average closing bid price
for the shares of common stock of the Company for the 30 days prior to the
closing of such non-cash financing.
6. Non-Renewal or Termination. In the event that this Agreement is not
renewed, or if terminated for any reason, notwithstanding any such
non-renewal or termination, CDC shall be entitled to full fees and
expenses as provided under Paragraphs 4 and 5 hereof, for any transaction
for which discussions were initiated during the term of this Agreement and
which is consummated within a period of twelve months after non-renewal or
termination of this Agreement.
7. Non-Circumvention: Both CDC and the Company agree as follows:
a. That each of the named Signatories, separately and individually, and
their associates, hereby agree that they, or their corporations,
partnerships, divisions, subsidiaries, employees, agents,
consultants, principals, parents, or other business relations will
not make any contract, deal, or agreement to provide debt or equity
financing with any buyers, sellers, agents, or brokers introduced by
any of the other Signatories, separately and individually, and their
associates, without the express consent of the introductory
Signatory; provided, however, that this Agreement will not apply to
any entity with whom a Signatory has a pre-existing relationship or
with whom a Signatory has previously held financial discussions.
Such previously held discussions shall be listed under a separate
attachment. This Agreement is also effective for the Signatories'
heirs, assignees, designees, and introductory agents.
b. By their signature below and execution of this Agreement, each of
the named Signatories, separately and individually, and their
associates, confirm that any corporation, partnership, organization,
firm, company or individual of which the Signee is a part, member,
principal, agent or otherwise associated with, is bound by this
Agreement.
c. This Agreement is a perpetuating guarantee for one (1) year from the
date hereof, and is to be applied to any and all transactions
involving Signatories, and investors introduced by CDC, including
subsequent, follow-up, repeat, rollover, extended, or re-negotiated
transactions, as well as to the initial transactions, regardless of
the success of the project. The Signatories hereby confirm that the
identities of the banks, lending institutions, corporations,
partnerships, individuals, trust, lenders, borrowers, buyers,
sellers, agents and brokers have been and are currently the property
of the introducing party, and shall remain so for the duration of
this Agreement.
d. The Signatories (and their firms, etc.) agree to keep completely
confidential, subject to applicable laws or court orders requiring
disclosure, the names of any banks, lending institutions,
corporations, partnerships, organizations, individuals, buyers,
sellers, lenders, borrowers, agents, or brokers introduced by any of
the other parties to this Agreement during the applicable
transactions and for the duration of this Agreement. The
confidentiality shall extend to any names, telephone numbers,
addresses, fax and telex number, and any other identifying
information. Such information is considered the property of the
introductory Signatory, and the parties hereby agree, individually
and separately, to discuss the same among themselves for the
determination of what shall be disclosed, and what shall be kept
confidential.
e. It is understood that this Agreement is a reciprocal one by and
between the Signatories as it pertains to each of their respective
privileged information and contracts.
f. It is understood that a Signatory cannot be considered or adjudged
to be in violation of this Agreement when the violation is
involuntary, i.e., due to situations beyond his/her control, such
as, but not limited to, acts of war, theft, or another's connection
having prior knowledge or possession of the privileged information
or contacts without the intervention or assistance of the
introductory Signatory. Essentially, the spirit of this Agreement is
one of mutual trust and confidence, and one of reliance on each
other to do what is fair and equitable.
g. If any of the Signatories is an officer of their own corporation,
this signature represents a corporate guarantee of corporate
responsibility with respect to this Agreement.
8. Liability of CDC: The Company acknowledges that all opinions and financial
advisory services, written or oral, given by CDC to the Company in
connection with CDC's engagement are intended solely for the benefit and
use of the Company in considering the transaction to which they relate,
and the Company agrees that no person or entity other than the Company
shall be entitled to make use of or rely upon the financial advisory
services of CDC 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 make any public references to CDC, or use CDC's name in any annual
reports or any other reports or releases of the Company without CDC's
prior written consent. CDC's maximum liability shall not exceed the cash
compensation received from the Company.
9. CDC's Services to Others: The Company acknowledges that CDC or its
affiliates are in the business of providing a range of financial advisory
services and financial services to others. Nothing herein contained shall
be construed to limit or restrict CDC in conducting such business with
respect to others, or in rendering such financial advisory services and
financial services to others.
10. Company Information:
a. The Company acknowledges and agrees that in performing its services
under this engagement, CDC may rely upon the data, material and
other information supplied by the Company without independently
verifying the accuracy, completeness or veracity of same. The
Company agrees to notify CDC in writing via overnight courier,
facsimile or e-mail of any material event and/or change within
twenty-four hours of its occurrence.
b. Except as contemplated by the terms hereof or as required by
applicable law, CDC shall keep confidential all material non-public
information provided to it by the Company, and shall not disclose
such information to any third party, other than such of its
employees and advisors as CDC determines to have a need to know.
11. Indemnification:
a. The Company shall indemnify and hold CDC harmless 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 of 1933, as amended (the "1933 Act"), the Securities Exchange
Act of 1934, as amended (the "Act") or any other federal or state
statute, at common law or otherwise, insofar as said liabilities,
claims and lawsuits (including awards and/or judgments) arise out of
or are in connection with the services rendered by CDC or any
transactions in connection with this Agreement, except for any
liabilities, claims and lawsuits (including awards and/or
judgments), arising out of acts or omissions of CDC. In addition,
the Company shall also indemnify and hold CDC harmless against any
and all costs and expenses, including reasonable counsel fees,
incurred or relating to the foregoing. CDC's maximum liability shall
not exceed the cash compensation received from the Company.
CDC contends 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 sold 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 there from any and all proceedings or hearings before any
regulatory bodies and/or authorities.
The Company shall give to CDC prompt notice of any such liability,
claim or lawsuit which the Company contends is the subject matter of
CDC's indemnification and CDC 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 or dispose of such
liability, claim or lawsuit, excepting there from any and all
proceedings or hearings before any regulatory bodies and/or
authorities.
b. CDC shall indemnify and hold the Company harmless from any claims or
judgements involving fraud which are the result of any intentional
act or intentional omission of CDC or its affiliates in connection
with this Agreement.
c. In order to provide for just and equitable contribution under the
act in any case in which (i) any person entitled to indemnification
under this Section 9 makes claim for indemnification pursuant hereto
but it is judicially determined (by the entry or 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 10 provides for indemnification in such case,
or (ii) contribution under the Act may be required on the part of
any such person in circumstances for which indemnification is
provided under this Section 10, then, and in each such case, the
Company and CDC 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
offering covered by the prospectus with respect to any transactions
in connection with this Agreement (taking into account the position
of the proceeds of the offering 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 no person guilty of a fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled
to contribution from any person who was not guilty of such
fraudulent misrepresentation.
Within fifteen (15) days after receipt by any party to this
Agreement (or its 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 affected by such
party seeking contribution without the written consent of the
Contributing Party. The indemnification provisions contained in this
Section 10 are in addition to any other rights or remedies which
either party hereto may have with respect to the other or hereunder.
12. CDC an Independent Contractor: CDC shall perform its services hereunder as
an independent contractor and not as an employee of the Company or an
affiliate thereof. It is expressly understood and agreed to by the parties
hereto that CDC 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 from time to time.
13. Agreement Renewal and Termination: This Agreement automatically renews
unless either party terminates prior to sixty days from the termination
date. Either party at anytime with thirty written notice may terminate
this Agreement.
14. Survivability: All paragraphs (Fees, Indemnification, Non-circumvention,
Liability, etc.) shall survive the termination of this Agreement.
15. Miscellaneous:
a. This Agreement between the Company and CDC constitutes the entire
agreement and understanding of the parties hereto, and supersedes
any and all previous agreements and understandings, whether oral or
written, between the parties with respect to the matters set forth
herein. The headings and captions in this Agreement are inserted for
convenience and reference only and shall not be deemed a part hereof
or used in the construction or interpretation hereof.
b. Any notice or communication permitted or required hereunder shall be
in writing and shall be deemed sufficiently given if hand-delivered
or sent (i) postage prepaid by registered mail, return receipt
requested, or (ii) by facsimile, to the respective parties as set
forth below, or to such other address as either party may notify the
other in writing.
If to the Company, to: Xxxx Xxxxxxx
President
DTOMI Inc.
000 Xxxxx Xxxx Xxxxxx Xxxx, Xxxxx X000
Xxxxxxxxxx, XX 00000
If to CDC, to: Xxxxxx X. Xxx
Chairman and CEO
Xxxxxxx Xxxxxxx, Inc.
00 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 1005
c. 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.
d. This Agreement may be executed in any number of counterparts, each
of whom together shall constitute one and the same original
document.
e. No provision of this Agreement may be amended, modified or waived,
except in a writing signed by all of the parties hereto.
f. This Agreement shall be construed in accordance with and governed by
the laws of the State of New York, without giving effect to conflict
of law principles. The parties hereby agree that any dispute which
may arise between them arising out of or in connection with this
Agreement shall be adjudicated before a court located in
Connecticut, and they hereby submit to the exclusive jurisdiction of
the courts of the State of New York with respect to any action or
legal proceeding commenced by any party, and 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 Paragraph 11(b) hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the date first above written.
XXXXXXX XXXXXXX & COMPANY, INC.
By:
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Name: Xxxxxx X. Xxx
Title: Chairman and CEO
THE COMPANY
By:
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Name: Xxxx Xxxxxxx
Title: President
