1
EXHIBIT 10.1
FINANCIAL CONSULTING AGREEMENT
This FINANCIAL CONSULTING AGREEMENT (this "Agreement") made as of
the day of , 1998, is by and between Xxxxxx International, Ltd., an
Ontario corporation, with its principal place of business at 0 Xxxxxx Xxxxxxxx,
Xxxxxxxxx, Xxxxxxx X0X 0X0 (the "Company"), and Xxxxxx Xxxxxxx & Company, Inc.,
a corporation, having its principal place of business at 00 Xxxxxx Xxxx, 0xx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the "Consultant").
RECITALS:
A. The Company is a public company with a class of equity securities
publicly traded, and desires to retain Consultant to provide certain
financial consulting services.
B. Consultant desires to provide certain financial consulting services to
the Company in accordance with the terms and conditions contained
hereinafter.
NOW, THEREFORE, in consideration of the mutual promises set forth
herein, the parties hereto hereby agree as follows:
1. CONSULTING SERVICES. During the term of this Agreement, the
Consultant will provide the Company with such regular and customary
consulting advice as is reasonably requested by the Company, provided
that the Consultant shall not be required to undertake duties not
reasonably within the scope of the consulting advisory service
contemplated by this Agreement. 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 be obligated to
render advice, upon the request of the Company, in good faith, but shall
not be obligated to spend any specific amount of time in doing so. The
Consultant's duties may include, but will not necessarily be limited to:
A. Providing sponsorship and exposure in connection with the
dissemination of corporate information regarding the Company to the
investment community at large under a systematic planned approach;
B. Rendering advice and assistance in connection with the preparation of
annual and interim reports and press releases;
C. Arranging, on behalf of the Company and its representatives, at
appropriate times, meetings with securities analysts of major regional
investment banking firms;
D. Assisting in the Company's financial public relations, including
discussions between the Company and the financial community;
E. Rendering advice with regard to internal operations, including:
(i) advice regarding formation of corporate goals and their
implementation;
(ii) advice regarding the financial structure of the Company and its
divisions or subsidiaries or any programs and projects of such
entities;
(iii) advice concerning the securing, when necessary and if possible, of
additional financing through banks, insurance companies and/or
other institutions;
(iv) advice regarding corporate organization and personnel;
F. Rendering advice with respect to any acquisition program of the
Company; and
G. Rendering advice regarding a future public or private offering of
securities of the Company or of any subsidiary.
1
2
2. RELATIONSHIPS WITH OTHERS. The Company acknowledges that the
Consultant and its affiliates are in the business of providing financial
services and consulting advice (of all types contemplated by this
Agreement) to others. Nothing herein contained shall be construed to
limit or restrict the Consultant or its affiliates from rendering such
services or advice to others.
3. TERM. The term of this Agreement shall be for two years commencing
as of the date first written above and terminating one day prior to the
second anniversary hereof; provided, however, that this Agreement shall
be automatically renewable for subsequent one year terms upon mutual
agreement of the parties.
4. COMPENSATION. In consideration for the performance of services
hereunder, the Company hereby agrees to pay Consultant the aggregate sum
of $ , representing full payment due, which will be paid as of the
date first written above. The Company further hereby agrees to pay the
reasonable out-of-pocket expenses incurred by Consultant in connection
with such services to be rendered hereunder. Consultant may, from time
to time, deem it to be in the best interests of the Company to retain an
outside consultant in connection with certain specific acquisitions or
proposed transactions. Consultant agrees to obtain the written consent
of the Company prior to retaining such Consultant. In such event, the
Company hereby agrees to pay any and all fees and expenses of such
consultant.
5. FINDER'S FEE. In addition to the duties set out in Section 1 hereof,
the Consultant agrees to furnish advice to the Company in connection
with the acquisition of and/or merger with other companies, joint
ventures with any third parties, and any other financing (other than the
private or public sale of the Company's securities for cash), including,
but not limited to, the sale of the Company itself (or any significant
percentage, subsidiaries or affiliates thereof). In the event that any
such transactions are directly or indirectly originated by the
Consultant for a period of five years from the date hereof, the Company
shall pay fees to the Consultant as follows:
$ -0- - $ 3,000,000 5% of legal consideration
Amount calculated pursuant to line 1 of this
$ 3,000,001 - $ 4,000,000 computation, plus 4% of excess over $3,000,000
Amount calculated pursuant to lines 1 and 2 of this
$ 4,000,001 - $ 5,000,000 computation, plus 3% of excess over $4,000,000
Amount calculated pursuant to lines 1, 2 and 3 of this
above $5,000,000 computation, plus 2% of excess over $5,000,000.
Legal consideration is defined, for purposes of this Agreement, as the
total of stock (valued at market on the day of closing, or if there is no public
market, valued as set forth herein for other property), cash and assets and
property or other benefits exchanged by the Company or received by the Company
or its shareholders (all valued at fair market value as agreed or, if not, by
any independent appraiser), irrespective of period of payment or terms.
6. SALES OR DISTRIBUTIONS OF SECURITIES. If the Consultant assists the
Company in the sale or distribution of securities to the public or in a
private transaction, the Consultant shall receive fees in the amount and
form to be arranged separately at the time of such transaction.
7. FORM OF PAYMENT. All fees due to the Consultant pursuant to Section
5 hereof are due and payable to the Consultant, in cash or by certified
check, at the closing or closings of a transaction specified in such
Section 5 or as otherwise agreed between the parties hereto. In the
event that this Agreement shall not be renewed for a period of at least
12 months at the end of the two year period referred to in Section 3
hereof or if terminated for any reason prior to the end of such two year
period then, notwithstanding any such non-renewal or termination, the
Consultant shall be entitled to the full fee for any transaction
contemplated under Section 5 hereof which closes within 12 months after
such non-renewal or termination.
2
3
8. LIMITATION UPON THE USE OF ADVICE AND SERVICES.
A. No person or entity, other than the Company or any of its
subsidiaries, 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 others, or encourage or facilitate the use of or
reliance upon such advice by others, without the prior written consent
of the Consultant.
B. It is clearly understood that the Consultant, for services rendered
under this Agreement, makes no commitment whatsoever as to making a
market in the securities of the Company or to recommend or advise its
clients to purchase the securities of the Company. Research reports or
corporate finance reports that may be prepared by the Consultant will,
when and if prepared, be done solely on the merits or judgment of
analysts of the Consultant or senior corporate finance personnel of the
Consultant.
C. The use of the Consultant's name in any annual report or other report
of the Company, or any release or similar document prepared by or on
behalf of the Company, must have the prior written approval of the
Consultant unless the Company is required by law to include the
Consultant's name in such annual report, other report or release, in
which event the Consultant will be furnished with a copy of such annual
report, other report or release using Consultant's name in advance of
publication by or on behalf of the Company.
D. Should any purchases of securities be requested to be effected through
the Consultant by the Company, its officers, directors, employees or
other affiliates, or by any person on behalf of any profit sharing,
pension or similar plan of the Company, for the account of the Company
or the individuals or entities involved, such orders shall be taken by a
registered account executive of the Consultant, shall not be subject to
the terms of this Agreement, and the normal brokerage commission as
charged by the Consultant will apply in conformity with all rules and
regulations of the New York Stock Exchange, the National Association of
Securities Dealers, Inc. or other regulatory bodies. Where no regulatory
body sets the fee, the normal established fee as used by the Consultant
shall apply.
E. The Consultant shall not disclose confidential information which it
learns about the Company as a result of its engagement hereunder, except
as such disclosure as may be required for Consultant to perform its
duties hereunder.
9. REPRESENTATIONS OF THE COMPANY. The Company hereby represents and
warrants that any and all information supplied hereunder to Consultant
in connection with any and all services to be performed hereunder by
Consultant for and on behalf of the Company shall be true, complete and
correct as of the date of such dissemination and shall not fail to state
a material fact necessary to make any of such information not
misleading. The Company hereby acknowledges that the ability of
Consultant to adequately provide financial consulting services hereunder
and/or to initiate and/or effectuate introductions on behalf of the
Company with respect to potential acquisitions is dependent upon the
prompt dissemination of accurate, correct and complete information to
Consultant. In addition, and notwithstanding anything contained herein
to the contrary, nothing hereunder shall obligate Consultant to make any
minimum number of introductions hereunder or to initiate any merger or
acquisitions involving or relating to the Company. The Company further
represents and warrants hereunder that this Agreement and the
transactions contemplated hereunder, including the issuance of the
warrants hereunder, have been duly and validly authorized by all
requisite corporate action; that the Company has the full right, power
and capacity to execute, deliver and perform its obligations hereunder;
and that this Agreement, upon execution and delivery of the same by the
Company, will represent the valid and binding obligation of the Company
enforceable in accordance with its terms. The representations and
warranties set forth herein shall survive the termination of this
Agreement.
10. INDEMNIFICATION. Since the Consultant will be acting on behalf of
the Company in connection with its engagement hereunder, the Company and
Consultant have entered into a separate indemnification agreement
substantially in the form attached hereto as Exhibit A and dated the
3
4
date hereof, providing for the indemnification of Consultant by the
Company. The Consultant has entered into this Agreement in reliance on
the indemnities set forth in such indemnification agreement.
11. INDEPENDENT CONTRACTOR. It is expressly understood and agreed that
the Consultant shall, at all times, act as an independent contractor
with respect to the Company and not as an employee or agent of the
Company, and nothing contained in the Agreement shall be construed to
create a joint venture, partnership, association or other affiliation,
or like relationship, between the parties. It is specifically agreed
that the relationship is and shall remain that of independent parties to
a contractual relationship and that the Consultant shall have no right
to bind the Company in any manner. In no event shall either party be
liable for the debts or obligations of the other except as otherwise
specifically provided in the Agreement.
12. AMENDMENT. No modification, waiver, amendment, discharge or change
of this Agreement shall be valid unless the same is evidenced by a
written instrument, executed by the party against which such
modification, waiver, amendment, discharge, or change is sought.
13. NOTICES. All notices, demands or other communications given
hereunder shall be in writing and shall be deemed to have been duly
given when delivered in person or transmitted by facsimile transmission
or the third calendar day after being mailed by United States registered
or certified mail, return receipt requested, postage prepaid, to the
addresses herein above first mentioned or to such other address as any
party hereto shall designate to the other for such purpose in the manner
hereinafter set forth.
14. ENTIRE AGREEMENT. This Agreement contains all of the understandings
and agreements of the parties with respect to the subject matter
discussed herein. All prior agreements, whether written or oral, are
merged herein and shall be of no force or effect.
15. SEVERABILITY. The invalidity, illegality or unenforceability of any
provision or provisions of this Agreement will not affect any other
provision of this Agreement, which will remain in full force and effect,
nor will the invalidity, illegality or unenforceability of a portion of
any provision of this Agreement affect the balance of such provision. In
the event that any one or more of the provisions contained in this
Agreement or any portion thereof shall for any reason be held to be
invalid, illegal or unenforceable in any respect, this Agreement shall
be reformed, construed and enforced as if such invalid, illegal or
unenforceable provision had never been contained herein.
16. CONSTRUCTION AND ENFORCEMENT. This Agreement shall be construed in
accordance with the laws of the State of New York, without application
of the principles of conflicts of laws. If it becomes necessary for any
party to institute legal action to enforce the terms and conditions of
this Agreement, the successful party will be awarded reasonable
attorneys' fees at all trial and appellate levels, expenses and costs.
17. BINDING NATURE. The terms and provisions of this Agreement shall be
binding upon and inure to the benefit of the parties, and their
respective successors and assigns.
18. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, including facsimile signatures which shall be deemed as
original signatures. All executed counterparts shall constitute one
Agreement, notwithstanding that all signatories are not signatories to
the original or the same counterpart.
4
5
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
XXXXXX INTERNATIONAL, LTD.,
an Ontario corporation
By:
Xxxxx Xxxxxx, President
XXXXXX XXXXXXX & COMPANY, INC.,
a________corporation
By:
Name:
Title:
5
6
EXHIBIT A
LADIES AND GENTLEMEN:
In connection with our engagement of XXXXXX XXXXXXX & COMPANY, INC. (the
"Consultant") as our financial advisor and investment banker, we hereby agree to
indemnify and hold the Consultant and its affiliates, and the directors,
officers, partners, shareholders, agents and employees of the Consultant
(collectively the "Indemnified Persons"), harmless from and against any and all
claims, actions, suits, proceedings (including those of shareholders), damages,
liabilities and expenses incurred by any of them (including , but not limited
to, fees and expenses of counsel) which are (A) related to or arise out of (i)
any actions taken or omitted to be taken (including any untrue statements made
or any statements omitted to be made) by us, or (ii) any actions taken or
omitted to be taken by any Indemnified Person in connection with our engagement
of the Consultant pursuant to the Financial Consulting Agreement, of even date
herewith, between the Consultant and us (the "Consulting Agreement"), or (B)
otherwise related to or arising out of the Consultant's activities on our behalf
pursuant to the Consultant's engagement under the Consulting Agreement, and we
shall reimburse any Indemnified Person for all expenses (including, but not
limited to, fees and expenses of counsel) incurred by such Indemnified Person in
connection with investigating, preparing or defending any such claim, action,
suit or proceeding (collectively a "Claim"), whether or not in connection with
pending or threatened litigation in which any Indemnified Person is a party. We
will not, however, be responsible for any Claim which is finally judicially
determined to have resulted exclusively from the gross negligence or willful
misconduct of any person seeking indemnification hereunder. We further agree
that no Indemnified Person shall have any liability to us for or in connection
with the Consultant's engagement under the Consulting Agreement except for any
Claim incurred by us solely as a direct result of any Indemnified Person's gross
negligence or willful misconduct.
We further agree that we will not, without the prior written consent of the
Consultant settle, compromise or consent to the entry of any judgment in any
pending or threatened Claim in respect of which indemnification may be sought
hereunder (whether or not any Indemnified Person is an actual or potential party
to such Claim), unless such settlement, compromise or consent includes a legally
binding, unconditional, and irrevocable release of each Indemnified Person
hereunder from any and all liability arising out of such Claim.
Promptly upon receipt by an Indemnified Person of notice of any complaint
or the assertion or institution of any Claim with respect to which
indemnification is being sought hereunder, such Indemnified Person shall notify
us in writing of such complaint or of such assertion or institution, but failure
to so notify us shall not relieve us from any obligation we may have hereunder,
unless, and only to the extent that, such failure results in the forfeiture by
us of substantial rights and defenses, and such failure to so notify us will not
in any event relieve us from any other obligation or liability we may have to
any Indemnified Person otherwise than under this Agreement. If we so elect or
are requested by such Indemnified Person, we will assume the defense of such
Claim, including the employment of counsel reasonably satisfactory to such
Indemnified Person and the payment of the fees and expenses of such counsel. In
the event, however, that such Indemnified Person reasonably determines in its
sole judgment that having common counsel would present such counsel with a
conflict of interest or such Indemnified Person concludes that there may be
legal defenses available to it or other Indemnified Persons different from or in
addition to those available to us, then such Indemnified Person may employ its
own separate counsel to represent or defend it in any such Claim and we shall
pay the reasonable fees and expenses of such counsel. Notwithstanding anything
herein to the contrary, if we fail timely or diligently to defend, contest, or
otherwise protect against any Claim, the relevant Indemnified Party shall have
the right, but not the obligation, to defend, contest, compromise, settle,
assert crossclaims or counterclaims, or otherwise protect against the same, and
shall be fully indemnified by us therefor, including, but not limited to, for
the fees and expenses of its counsel and all amounts paid as a result of such
Claim or the compromise or settlement thereof. In any Claim in which we assume
the defense, the Indemnified Person shall have the right to participate in such
defense and to retain its own counsel therefor at its own expense.
We agree that if any indemnity sought by an Indemnified Person hereunder is
held by a court to be unavailable for any reason, then (whether or not the
Consultant is the Indemnified Person) we and the Consultant shall contribute to
the Claim for which such indemnity is held unavailable in such proportion as is
6
7
appropriate to reflect the relative benefits to us, on the one hand, and the
Consultant, on the other, in connection with the Consultant's engagement by us
under the Consulting Agreement, subject to the limitation that in no event shall
the amount of the Consultant's contribution to such Claim exceed the amount of
fees actually received by the Consultant from us pursuant to the Consultant's
engagement under the Consulting Agreement. We hereby agree that the relative
benefits to us, on the one hand, and the Consultant, on the other hand, with
respect to the Consultant's engagement under the Consulting Agreement shall be
deemed to be in the same proportion as (a) the total value paid or proposed to
be paid or received by us or our shareholders as the case may be, pursuant to
the transaction (whether or not consummated) for which the Consultant is engaged
to render services bears to (b) the fee paid or proposed to be paid to the
Consultant in connection with such engagement.
Our indemnity, reimbursement and contribution obligations under this
Agreement shall be in addition to, and shall in no way limit or otherwise
adversely affect any rights that an Indemnified Party may have at law or at
equity.
Should the Consultant, or any of its directors, officers, partners,
shareholders, agents or employees, be required to be requested by us to provide
documentary evidence or testimony in connection with any proceeding arising from
or relating to the Consultant's engagement under the Consulting Agreement, we
agree to pay all reasonable expenses (including but not limited to fees and
expenses of counsel) in complying therewith and one thousand dollars ($1,000)
per day for any sworn testimony or preparation therefor, payable in advance.
We hereby consent to personal jurisdiction and service of process and venue
in any court in which any claim for indemnity is brought by any Indemnified
Person.
It is understood that, in connection with the Consultant's engagement under
the Consulting Agreement, the Consultant may be engaged to act in one or more
additional capacities and that the terms of the original engagement or any such
additional engagement may be embodied in one or more separate written
agreements. The provisions of this Agreement shall apply to the original effect
following the completion or termination of the Consultant's engagement(s).
Very truly yours,
XXXXXX INTERNATIONAL, LTD.
By:
Xxxxx Xxxxxx, President
CONFIRMED AND AGREED TO:
XXXXXX XXXXXXX & COMPANY, INC.
By:
Name:
Title:
7
