EXHIBIT 10.11
MANAGEMENT CONSULTING AGREEMENT
THIS MANAGEMENT CONSULTING AGREEMENT (this "Agreement") is made and
entered into as of April 7, 2004 ("Effective Date"), by and between TARPON
INDUSTRIES, INC., (f/k/a WALL ST. ACQUISITIONS, INC., a Michigan corporation
(the "Company"), and BAINBRIDGE ADVISORS, LLC, a Michigan limited liability
company ("Consultant").
RECITALS:
The Company desires to retain Consultant and Consultant desires to be
so retained under the terms set forth in this Agreement.
The parties agree as follows:
1. RETENTION OF CONSULTANT. The Company hereby retains Consultant as a
consultant to the Company on the terms, and subject to the conditions, set forth
in this Agreement.
2. TERM. This Agreement shall be in effect for an initial term
commencing on the date hereof and ending on the third (3rd) anniversary of the
Effective Date (the Term"). The Term shall be automatically extended thereafter
on a year to year basis unless the Company or Consultant provides written notice
of its desire to terminate this Agreement to the other party at least 120 days
prior to the expiration of the Term or 60 days prior to any one year extension
of the Term.
3. SERVICES. Consultant shall perform or cause to be performed the
following services for the Company and its subsidiaries, as applicable (the
"Services"):
(a) Advisory and consulting services ("Advisory Services")
concerning the development and implementation of the Company's business
and financing plans and strategy, as mutually agreed to by Consultant
and the Company, which may include, without limitation, the following:
(i) analyzing financing alternatives, including,
without limitation, those arising in connection with
acquisitions;
(ii) selecting and arranging for financing sources
and advisors, including senior lenders, investment bankers and
underwriters, as applicable; and
(iii) assisting the Company in compiling information
necessary for inclusion in the Company's proposed S-1
Registration statement in connection with an Offering (as
defined below).
(b) Transaction advice ("Transaction Services") concerning the
Company's expansion and acquisition plans, as mutually agreed to by
Consultant and the Company, which may include, without limitation, the
following:
-1-
(i) analyzing the Company's, or its subsidiaries',
potential acquisitions and dispositions;
(ii) conducting due diligence with respect to
prospective acquisition targets;
(iii) assisting and advising the Company in
negotiating definitive purchase agreements with acquisition
targets; and
(iv) advising the Company with respect to the
integration of the various businesses that the Company may
acquire by merger or otherwise.
Company acknowledges and agrees that Bainbridge is not, and does not
hold itself out to be, a licensed real estate agent or broker. To the extent
that any Transaction entails real estate assets or real estate business such
that a license as a real estate agent or broker is required for advisory fees,
Consultant may employ the services of a licensed broker with respect to that
portion of the Transaction requiring a licensed person, and, to the extent that
such expense is less than $5,000, the expense will be paid by the Company.
Otherwise, the Company and Consultant will share the expense of such licensed
broker equally in absence of a mutually agreeable arrangement to the contrary.
(c) Other services for the Company and its subsidiaries, if
applicable, upon which the Company and Consultant mutually agree.
"Offering" means an offering and sale by the Company of its capital
stock to the public pursuant to an effective registration statement under the
Securities Act of 1933, as amended, or any comparable statement under any
similar United States federal statute then in effect.
4. FEES. During the Term, as extended, the Company shall pay to
Consultant the following fees:
(a) For Advisory Services, $15,000 per month on the first day
of each month during the Term commencing upon the signing of this
Agreement ("Monthly Fee").
(b) For Transaction Services, the Company will pay Consultant
the following fees:
(i) In the event an acquisition approved by the
Company's Board of Directors (a "Transaction") is consummated,
the Company will pay Consultant, in accordance with Subsection
(ii) below, a "success fee" equal to 4% of the total
consideration paid in the Transaction, subject to the minimum
and maximum fees as follows:
A. Subject to Subsection (ii) below, the
Consultant will earn upon the closing of each
Transaction, a minimum success fee of $200,000 per
Transaction and a maximum success fee of $300,000 per
Transaction.
-2-
B. Subject to Subsection (ii) and Section 15
below, with respect to the proposed acquisitions of
EWCO, Steelbank and Xxxxxx (Xxxxxx) (the "Initial
Transactions"), the success fee will be $200,000 for
each Transaction.
(ii) Except as provided otherwise in this paragraph
4(b)(ii), any success fee earned by Consultant under this
Section 4(b) will be paid in 12 monthly installments
commencing on the first day of the month following the closing
of a Transaction. With respect to the Initial Transactions
only, the fees will be payable in 18 equal monthly
installments commencing on the first day of the month
following the closing of an Initial Transaction; provided,
however, that if the Company completes an Offering during any
such 18 month payment period, all remaining unpaid fees
payable with respect to each of the Initial Transactions will
be reconfigured into equal monthly payments, such that the
full amount of all of such fees will be fully paid at the
expiration of 24 months after the date of closing of such
Initial Transaction.
(c) Notwithstanding any provision of this Section 4 to the
contrary, the total fees paid by the Company to Consultant under this
Agreement will not exceed $60,000 per month; provided that this
limitation shall apply only to the timing and amounts of monthly
payments to Consultant without in any way reducing the obligations of
the Company ultimately to pay fees due and owing to Consultant as
provided in this Agreement.
(d) The Company will not have a right of offset against fees
that have actually been paid by the Company to Consultant.
5. STOCK OPTION. The Company hereby grants to Consultant, or its
designee, fully and immediately vested options to purchase 110,000 shares of the
Company's stock for a purchase price of 110% of the price per share offered to
the public at the time of the Company's Offering. The options will remain
exercisable for a period of ten (10) years after issue and, at the election of
the holder, may be exercised in a cashless transaction by the surrender of
Company shares or the reduction of exercisable options sufficient to pay the
exercise price. Within 30 days after execution and delivery of this Agreement,
the Company will amend its proposed 2004 Stock Option Plan as and if necessary
to authorize and enable the grant of options pursuant to this section 5, and
will diligently pursue obtaining appropriate approvals to the Plan as so
amended, which approvals will be obtained prior to the date that the Company
makes its initial filing of a registration statement in connection with the
Offering. The options granted will be subject to the terms of the Stock Option
Plan and any agreement issued by the Company with respect to the options will
include the provisions contained in this Section 5.
6. METHOD OF PERFORMING SERVICES. Consultant shall cause Xxxx X. Xxxxx
to be the primary provider to the Company of the Services described in Section 3
and Consultant shall use such other of its personnel as it deems necessary for
performance of the Services. The Services shall be performed at the reasonable
direction of the Company's Board of Directors as to the timing and scope of the
Services. For purposes of this paragraph, Consultant will have satisfactorily
provided the required availability to perform such services so long as, with
respect to Xxxx X. Xxxxx, Xx. Xxxxx has provided
-3-
services to the Company of an average of at least 120 man-hours per month during
the Term, with the understanding that the number of hours may increase or
decrease based upon the projects and services required at the reasonable
discretion of the Board of Directors. The Services will be performed on a
non-exclusive basis and, to the extent that Consultant performs similar services
for others, such services will not interfere with Xx. Xxxxx' availability to the
Company to perform the Services in accordance with the terms set forth in this
Agreement.
7. COMPENSATION OF CONSULTANT'S PERSONNEL. Other than the fees and
payments provided in this Agreement, the Company shall not be responsible for
payment of compensation, federal or state income tax withholding and social
security taxes, unemployment insurance, health or disability insurance,
retirement benefits, or other welfare or pension benefits, to Consultant's
personnel assigned to Company's work.
8. LIABILITY. Neither Consultant nor any of its members, managers, or
employees (collectively, the "Consultant Group") shall be liable to the Company
or its affiliates for any loss, liability, damage or expense (collectively, a
"Loss") arising out of or in connection with the performance of services
contemplated by this Agreement, unless such Loss is a result of the gross
negligence or willful misconduct of any member of the Consultant Group.
Consultant makes no representations or warranties, express or implied, with
respect to the services to be provided by Consultant under this Agreement.
9. INDEMNITY.
(a) The Company agrees to indemnify and hold harmless the
Consultant, and its respective managers, members, officers, agents and
controlling persons (each an "Indemnified Party") against any and all
loss, liability, claim, damage and expense whatsoever (and all actions
in respect thereof), and to reimburse the Consultant for reasonable
legal fees and related expenses as incurred (including, but not limited
to the costs of investigating, preparing or defending any such action
or claim and the costs of giving testimony or furnishing documents in
response to a subpoena or otherwise), arising out of any untrue
statement or alleged untrue statement of a material fact contained in
any registration statement, prospectus or other document (the "Offering
Documents") or the omission or alleged omission therefrom of a material
fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading or any breach
of the representations, warranties or covenants of the Company set
forth therein unless any such untrue statements or material fact, or
omission was made or omitted, as the case may be, based upon
information provided by, and with the actual knowledge of Consultant.
(b) Promptly after receipt by an Indemnified Party under this
Section of notice of any claim or the commencement of any action, the
indemnified party will, if a claim in respect thereof is to be made
against the Company under this Section, notify in writing the Company
of the commencement thereof; but the omission so to notify the Company
will not relieve it from any liability which it may have to the
Indemnified Party otherwise than under this Section except to the
extent the defense of the claim is prejudiced. In case any such action
is brought against an Indemnified Party, and it notifies the Company
of the commencement thereof, the Company
-4-
will be entitled to participate in, and, to the extent that it may
wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, subject to the provisions herein stated,
with counsel reasonably satisfactory to the Indemnified Party, and
after notice from the Company to the Indemnified Party of its election
so to assume the defense thereof, the Company will not be liable to the
Indemnified Party under this Section for any legal or other expenses
subsequently incurred by the Indemnified Party in connection with the
defense thereof other than reasonable costs of investigation (provided
the Company has been advised in writing that such investigation is
being undertaken). The Indemnified Party shall have the right to employ
separate counsel in any such action and to participate in the defense
thereof, but the fees and expenses of such counsel shall not be at the
expense of the Company if the Company has assumed the defense of the
action with counsel reasonably satisfactory to the Indemnified Party;
provided that the fees and expenses of such counsel shall be at the
expense of the Company if (i) the employment of such counsel has been
specifically authorized in writing by the Company or (ii) the named
parties to any such action (including any impleaded parties) include
both the Indemnified Party or Parties and the Company and, in the
reasonable judgment of counsel for the Indemnified Party, it is
advisable for the Indemnified Party or Parties to be represented by
separate counsel due to an actual or potential conflict of interest (in
which case the Company shall not have the right to assume the defense
of such action on behalf of the an Indemnified Party or Parties), it
being understood, however, that the Company shall not, in connection
with any one such action or separate but substantially similar or
related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the reasonable fees
and expenses of more than one separate firm of attorneys for all the
Indemnified Parties. No settlement of any action against an Indemnified
Party shall be made unless such an Indemnified Party is fully and
completely released in connection therewith.
(c) To provide for just and equitable contribution, if (i) an
Indemnified Party makes a claim for indemnification pursuant to this
Section 9 but it is found in a final judicial determination, not
subject to further appeal, that such indemnification may not be
enforced in such case, even though this Agreement expressly provides
for indemnification in such case, or (ii) any indemnified or
indemnifying party seeks contribution under the Securities Act, the
Securities Exchange Act of 1934 (the "Exchange Act"), or otherwise,
then the Company (including for this purpose any contribution made by
or on behalf of any officer, director, employee or agent for the
Company, or any controlling person of the Company), on the one hand,
and the Consultant (including for this purpose any contribution by or
on behalf of an indemnified party), on the other hand, shall contribute
to the losses, liabilities, claims, damages, and expenses whatsoever to
which any of them may be subject, in such proportions as are
appropriate to reflect the relative benefits received by the Company,
on the one hand, and the Consultant, on the other hand; provided,
however, that if applicable law does not permit such allocation, then
other relevant equitable considerations such as the relative fault of
the Company and the Consultant in connection with the facts which
resulted in such losses, liabilities, claims, damages, and expenses
shall also be considered. In no case shall the Consultant be
responsible for a portion of the contribution obligation in excess of
the compensation
-5-
received by it pursuant to Section 4 hereof. No person guilty of a
fraudulent misrepresentation shall be entitled to contribution from any
person who is not guilty of such fraudulent misrepresentation. For
purposes of this Section 9, each person, if any, who controls the
Consultant within the meaning of Section 15 of the Securities Act or
Section 20(a) of the Exchange Act and each officer, director,
stockholder, employee and agent of the Consultant, shall have the same
rights to contribution as the Consultant, and each person, if any who
controls the Company within the meaning of Section 15 of the Securities
Act or Section 20(a) of the Exchange Act and each officer, director,
employee and agent of the Company, shall have the same rights to
contribution as the Company, subject in each case to the provisions of
this Section 9. Anything in this Section 9 to the contrary
notwithstanding, no party shall be liable for contribution with respect
to the settlement of any claim or action effected without its written
consent, not to be unreasonably withheld or delayed.
(d) The Company shall defend, indemnify and hold harmless the
Consultant Group from and against any and all Loss arising from any
claim by any third person, with respect to, or in any way related to,
this Agreement (including reasonable attorneys' fees) (collectively,
"Claims") resulting from any act or omission of any member of
Consultant Group other than for Claims which shall be proven in a court
of competent jurisdiction to be the direct result of willful misconduct
by a member of Consultant Group acting within the scope of their
authority.
(e) During the Term of this Agreement, the Company will
reimburse Consultant up to $5,000 per year for the premiums associated
with professional liability errors and omissions insurance but only
with respect to the coverage for Services. The Company's obligation to
reimburse Consultant for premiums will cease after consummation of two
Transactions, other than the Initial Transactions. The coverage will
cover costs of defense, in amounts not less than $1 million, covering
any such action, but only with respect to the Services. To the extent
any insurance is in effect, Consultant shall look to such insurance
first before seeking indemnity from the Company.
10. RELATIONSHIP OF THE PARTIES. Nothing herein will be construed to
create a partnership or joint venture by or between the Company and Consultant
or to make one the agent of the other. The Company and Consultant will not hold
themselves out as a partner or agent of the other or to otherwise state or imply
by advertising or otherwise any relationship between them in any manner
contrary to the terms of this Agreement. The Company and Consultant do not have,
and will not represent that they have, the power to bind or legally obligate the
other. The parties acknowledge that this arrangement is not exclusive and the
Company and Consultant shall have the right, subject to the provisions of
Sections 6 and 12 hereunder, to enter into similar arrangements with other
parties. No employee of Consultant will be considered an employee of the Company
by either party for any purpose whatsoever. Except as expressly specified in
this Agreement, neither Consultant nor any members of the Consultant Group shall
owe the Company a fiduciary duty.
-6-
11. CONFIDENTIALITY.
(a) Consultant will not, at any time during the Term (other
than as may be required in connection with the performance of its
Services hereunder) or thereafter, directly or indirectly, use,
communicate, disclose or disseminate any Confidential Information (as
defined in Subsection 11(b)) in any manner whatsoever.
(b) As used in Subsection 11(a), the term "Confidential
Information" will mean all business and technical information
including, but not limited to, information of any nature and in any
form which at the time or times concerned is not generally known to
those persons engaged in business similar to that conducted or
contemplated by the Company (other than by an act or acts of a person
not authorized to disclose such information), and which relates to one
or more aspects of the future plans or the present or past business of
the Company or any affiliate or predecessor, including, without
limitation, patents and patent applications, inventions and
improvements (whether or not patentable), development projects,
policies, processes, formulas, techniques, know-how, pricing, financial
information, and other facts relating to manufacturing, sales,
advertising, promotions, transportation, packaging, labeling, lab
techniques and testing methods, distribution, financial matters,
strategies, customers and potential customers, marketing and sales
methods, preparation of bids, vendor sources and vendor financing
arrangements, other than information which is independently developed
without using the Confidential Information in any way or which is in
the public domain or which becomes available to a recipient on a
non-confidential basis without violating Subsection 11A or which is
required to be disclosed by law and is disclosed in the manner so
required.
12. OPPORTUNITIES. Consultant acknowledges and covenants that if
Consultant becomes aware of an opportunity to acquire a company in the steel
industry, such opportunity shall be deemed to be that of the Company, and
Consultant will give the Company full disclosure of such opportunity, and
neither Consultant nor any person under Consultant's control shall pursue such
opportunity for its own account, nor shall Consultant make others aware of such
opportunity, unless after full disclosure, the Company has authorized the
Consultant to pursue such opportunity in writing. Consultant acknowledges that,
without the written consent of the Company, that Consultant is restricted from
pursuing an opportunity in the steel industry even if the Company does not
pursue such opportunity on its own.
13. DEFAULT. If the Company defaults in its payment obligations
hereunder and such default is not cured within thirty (30) days after Consultant
provides written notice of such default to the Company and such failure to pay
is not a result of a breach by Consultant of its obligations under this
Agreement, Consultant shall have the right without further notice to declare all
of the Company's obligations hereunder immediately due and payable.
14. EXPENSES. The Company agrees to pay all reasonable expenses
incurred by Consultant in connection with this Agreement, including but not
limited to: (a) fees and expenses of legal counsel retained at the direction of
the Company in connection with performance of the Services; (b) legal fees up to
$7,500 in connection with the preparation of this Agreement; and (c)
out-of-pocket expenses incurred by Consultant in connection with the provision
of services hereunder, including, but without limitation to travel, or the
attendance at any meeting of the board of directors (or any committee thereof)
of the
-7-
Company or any of its affiliates which shall not exceed $5,000 per month without
the prior written approval of the Company's Chief Executive Officer, President
or the Board of Directors.
15. TERMINATION. Neither party may terminate this Agreement prior to
the expiration of its Term except in accordance with this Section 15. In the
event of a breach of the provisions of this Agreement by either party, the
non-breaching party promptly will give written notice to the other party
detailing the breach. If the breaching party fails to cure such breach within
thirty (30) days after written notice provided to the breaching party, the
non-breaching party shall have the right to terminate this Agreement. If this
Agreement is terminated by Company as a result of the breach by Consultant,
Company shall pay Consultant only the fees earned by Consultant under Subsection
4(b)(i)(A) of this Agreement in accordance with Subsection 4(b)(ii) and will
have no further obligation to pay the Monthly Fee or any fees under Subsection
4(b)(ii)(B).
16. ATTORNEY FEES. If either party brings suit to enforce its rights
under this Agreement, the non-prevailing party will reimburse the prevailing
party for its reasonable attorney fees, court costs and expert witness fees.
17. NOTICES. All notices hereunder shall be in writing and shall be
delivered personally or mailed by United States mail, postage prepaid, addressed
to the parties as follows:
TO THE COMPANY: Tarpon Industries, Inc.
0000 Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
TO CONSULTANT: Bainbridge Advisors, LLC
X.X. Xxx 00000
Xxxxxx Xxxxxx, XX 00000
18. ASSIGNMENT. Neither party may assign any obligations hereunder to
any other party without the prior written consent of the other party.
19. SUCCESSORS. This Agreement and all the obligations and benefits
hereunder shall inure to the successors and assigns of the parties.
20. COUNTERPARTS. This Agreement may be executed and delivered by each
party hereto in separate counterparts, each of which when so executed and
delivered shall be deemed an original and all of which taken together shall
constitute but one and the same agreement.
21. ENTIRE AGREEMENT; MODIFICATION; GOVERNING LAW. The terms and
conditions hereof constitute the entire agreement between the parties hereto
with respect to the subject matter of this Agreement and supersede all previous
communications, either oral or written, representations or warranties of any
kind whatsoever, except as expressly set forth herein. No modifications of this
Agreement nor waiver of the terms or conditions thereof shall be binding upon
either party unless approved in writing by an authorized representative of such
party. All issues concerning this agreement shall be governed by and
-8-
construed in accordance with the laws of the State of Michigan, without giving
effect to any choice of law or conflict of law provision or rule (whether of the
State of Michigan or any other jurisdiction) that would cause the application of
the law of any jurisdiction other than the State of Michigan. The persons
signing this Agreement on behalf of the respective parties identified below,
hereby represent and warrant that he or she has the authority to sign this
Agreement on behalf of such entity and, that by doing so, this Agreement
represents the binding and enforceable agreement with respect to such party.
22. SEVERABILITY. In case any one or more of the provisions contained
in this Agreement shall for any reason be held to be invalid, illegal or
unenforceable in any respect, that invalidity, illegality or unenforceability
shall not affect any other provision of this Agreement, and this Agreement shall
be construed as if the invalid, illegal or unenforceable provision had never
been contained within the body of this Agreement.
23. CONSENT TO JURISDICTION. Each of the parties agrees that all
actions, suits or proceedings arising out of or based upon this Agreement or the
subject matter hereof shall be brought and maintained exclusively in the federal
and state courts of the State of Michigan. Each of the parties hereto by
execution hereof: (a) hereby irrevocably submits to the jurisdiction of the
United States District Court for the Eastern District of Michigan or the Circuit
Court for the County of Oakland for the purpose of any action, suit or
proceeding arising out of or based upon this Agreement or the subject matter
hereof; and (b) hereby waives to the extent not prohibited by applicable law,
and agrees not to assert, by way of motion, as a defense or otherwise, in any
such action, suit or proceeding, any claim that it is not subject personally to
the jurisdiction of the above-named courts, that it is immune from
extraterritorial injunctive relief or other injunctive relief, that its property
is exempt or immune from attachment or execution, that any such action, suit or
proceeding may not be brought or maintained in one of the above-named courts,
that any such action, suit or proceeding brought or maintained in one of the
above-named courts should be dismissed on grounds of forum non conveniens,
should be transferred to any court other than one of the above-named courts,
should be stayed by virtue of the pendency of any other action, suit or
proceeding in any court other than one of the above-named courts, or that this
Agreement or the subject matter hereof may not be enforced in or by any of the
above-named courts. Each of the parties hereto hereby consents to service of
process in any such suit, action or proceeding in any manner permitted by the
laws of the State of Michigan, agrees that service of process by registered or
certified mail, return receipt requested, at the address specified herein is
reasonably calculated to give actual notice and waives and agrees not to assert
by way of motion, as a defense or otherwise, in any such action, suit or
proceeding any claim that service of process made in accordance with the notice
provision herein does not constitute good and sufficient service of process. The
provisions of this Section shall not restrict the ability of any party to
enforce in any court any judgment obtained in a federal or state court of the
State of Michigan.
-9-
provisions of this Section shall not restrict the ability of any party to
enforce in any court any judgment obtained in a federal or state court of the
State of Michigan.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
COMPANY:
TARPON INDUSTRIES, INC., a Michigan
corporation
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------------------
Its: President & CEO
CONSULTANT:
BAINBRIDGE ADVISORS LLC, a Michigan limited
liability company
By: /s/ Xxxx X. Xxxxx
--------------------------------------
Its: MEMBER
-10-
FIRST AMENDMENT
TO
MANAGEMENT CONSULTING AGREEMENT
This First Amendment to Management Consulting Agreement (this
"Amendment") is made and entered into as of October 13, 2004, but is effective
as of April 7, 2004, by and between Tarpon Industries, Inc. (f/k/a Wall Street
Acquisitions, Inc.), a Michigan corporation (the "Tarpon"), BST Acquisition,
Ltd, a corporation formed under the laws of New Brunswick, Canada ("BST" and
together with Tarpon, the "Company"), and Bainbridge Advisors, Inc. (formerly
Bainbridge Advisors, LLC) ("Consultant").
RECITALS
A. Tarpon and Consultant are parties to that certain Management
Consulting Agreement, dated April 7, 2004 (the "Agreement"), pursuant to which
the Tarpon retained Consultant to provide certain Services, as more particularly
described therein. Capitalized terms not defined herein shall have the meaning
ascribed to such terms in the Agreement.
B. Tarpon and Consultant wish to amend the Agreement in
accordance with the terms and conditions of this Amendment, and BST wishes to
become a party to the Agreement pursuant to this Amendment.
Therefore, the parties agree as follows:
1. Section 3(a) is hereby amended and replaced in full with the
following language:
"3. Services. Consultant shall perform or cause to be
performed the following services for the Company and its subsidiaries
as applicable (the "Services"):
(a) Advisory and consulting services ("Advisory
Services") concerning the development and implementation of
the Company's (or its subsidiaries') businesses and financing
plans and strategies, as mutually agreed upon by Consultant
and the Company, which may include, without limitation, the
following:
(i) analyzing financing alternatives,
including, without limitation, those arising in
connection with acquisitions;
(ii) selecting and arranging for financing
sources and advisors, including senior lenders,
investment bankers and underwriters, as applicable;
and
(iii) assisting Tarpon, at Tarpon's
direction, in compiling certain information Tarpon
deems necessary for inclusion in its proposed
registration statement on Form S-1 in connection with
an Offering (as defined below)."
2. Section 3(c) is hereby amended and replaced in full with the
following language:
"(c) Other services for the Company and its subsidiaries, if
applicable, at the request and direction of the Board of Directors of
the Company, upon which the Company and Consultant mutually agree
("Other Services"). Unless the parties otherwise agree in writing, such
Other Services shall be deemed Advisory Services, payment for which
shall be included in Monthly Fee (as defined in Section 4(a) and the
success fee (as defined in Section 4(b)(i)(A))."
3. Section 4(a) is hereby amended and replaced in full with the
following language:
"4. Fees. During the Term, as extended, if applicable,
the Company shall pay to Consultant, and each Company shall be jointly
and severally liable for, the following aggregate fees in consideration
of Consultant's performance of the Advisory Services and Transaction
Services:
(a) For Advisory Services, $15,000 per month on the
first day of each month during the Term commencing upon the
signing of this Agreement ("Monthly Fee")."
4. Section 4(b) is hereby amended and replaced in full with the
following language:
"(b) For Transaction Services, the Company will pay
Consultant the following fees:
(i) In the event an acquisition approved by
the Company's Board of Directors (a "Transaction") is
consummated, the Company will pay Consultant, in
accordance with Subsection (ii) below, a "success
fee" equal to 4% of the total consideration paid in
the Transaction, subject to minimum and maximum fees
as follows:
A. Subject to Subsection (ii)
below, the Consultant will earn upon the
closing of each Transaction, a minimum
success fee of $200,000 per Transaction and
a maximum success fee of $300,000 per
Transaction.
2
B. Subject to Subsection (ii) below
and Section 15 below, with respect to the
proposed acquisitions of EWCO, Steelbank and
Xxxxxx (Xxxxxx) (the "Initial
Transactions"), the success fee will be
$200,000 for each Transaction.
(ii) Except as provided otherwise in this
paragraph 4(b)(ii), any success fee earned by
Consultant under this Section 4(b) will be paid in 12
monthly installments commencing on the first day of
the month following the closing of a Transaction and
payable on the first day of each month thereafter
until such success fee is paid in full. With respect
to the Initial Transactions only, the fees will be
payable in 18 equal monthly installments commencing
on the first day of the month following the closing
of an Initial Transaction and payable on the first
day of each month thereafter until such success fee
is paid in full; provided, however, that if Tarpon
completes an Offering during any such 18 month
period, all remaining unpaid fees payable with
respect to each of the Initial Transactions will be
reconfigured into equal monthly payments, such that
the full amount of all of such fees will be fully
paid at the expiration of 24 months after the date of
closing of such Initial Transaction. For purposes of
clarification, the attached Schedule 4(b)(ii) sets
forth the calculation of the success fees with
respect to the Initial Transactions.
5. Section 4(d) is hereby amended and replaced in full with the
following language:
"(d) Any payment for Advisory Services or Transaction
Services, once paid by the Company pursuant to this Section 4, shall be
deemed to be an acknowledgement by the Company that such Advisory
Services and/or Transaction Services for which such payment has been
made have been fully performed by Consultant."
6. A new Section 4(e) is hereby added as follows:
"(e) Any of the aforementioned fees, including the Monthly Fee
and the success fee, may be paid by any of the Company's subsidiaries
or affiliates, unless such entities are contractually precluded or
precluded by applicable law."
7. Section 5 is amended and replaced in full with the following
language:
"5. Stock Option. Tarpon hereby grants to Consultant, or
its designee, fully and immediately vested options to purchase 110,000
shares of Tarpon's common stock for a purchase price of 110% of the
price per share offered to the
3
public at the time of Tarpon's Offering. The options will remain
exercisable for a period of ten (10) years after issue and, at the
election of the holder, may be exercised in a cashless transaction by
the surrender of the shares or the reduction of exercisable options
sufficient to pay the exercise price. Tarpon covenants and agrees to
grant such options at the time of Tarpon's upcoming proposed initial
public offering."
8. Section 6 is hereby amended and replaced in full with the
following language:
"6. Method of Performing Services. Consultant shall cause Xxxx
X. Xxxxx to be the primary provider to the Company of the Services
described in Section 3 and Consultant shall use such other of its
personnel as it deems necessary for performance of the Services. The
Services shall be preformed at the reasonable direction of the
Company's Board of Directors as to the timing and scope of the
Services. For purposes of this paragraph, Consultant shall have
satisfactorily provided the required availability to perform such
Services so long as, with respect to Xxxx X. Xxxxx, Xx. Xxxxx has
provided Services to the Company of an average of at least an aggregate
of 120 man-hours per month for each month during the Term through
February 2006 and at least aggregate of 70 man-hours per month for each
month thereafter during the Term (unless the Company or its
subsidiaries enter into a Transaction or Transactions, other than the
Initial Transactions), as recorded and calculated by Consultant (absent
gross error), with the understanding that the number of hours may
increase or decrease based upon the projects and services required at
the reasonable discretion of the Board of Directors. The Company shall
be obligated to pay the Advisory Fees and Transaction Fees, as
applicable, even if the Company does not utilize Consultant for such
allotted man-hours. The Services will be performed on a non-exclusive
basis, provided that to the extent that Consultant performs similar
services for others, such services shall not interfere with Xx. Xxxxx'
availability to the Company to perform the Services in accordance with
the terms set forth in this Agreement."
9. Section 8 is hereby amended and replaced in full with the
following language:
"8. Liability. Neither Consultant nor any of its officers,
directors, managers, employees, agents or shareholders (collectively,
the "Consultant Group") shall be liable to the Company or any of its
subsidiaries or affiliates for any loss, liability, damage, expenses
(including attorney's fees) (collectively, "Loss") arising out of or in
connection with the performance of the Services, unless such Loss is a
result of the gross negligence or willful misconduct of any party in
the Consultant Group. Consultant makes no representations or
warranties, express or implied, with respect to the Services."
4
10. Section 9(a) is hereby amended and replaced in full with the
following language:
"9. Indemnity.
(a) Each Company and its subsidiaries hereby, jointly
and severally, agrees to indemnify and hold harmless
Consultant and its respective officers, directors, managers,
employees, agents or shareholders (each, an "Indemnified
Party") against any and all loss liability, claim, damage and
expense whatsoever (and all actions in respect thereof), and
to reimburse the Consultant for reasonable legal fees and
related expenses as incurred (including, but not limited to
the costs of investigating, preparing or defending any such
action or claim and the costs of giving testimony or
furnishing documents in response to a subpoena or otherwise),
arising out of any untrue statement or alleged untrue
statement of a material fact contained in any registration
statement, prospectus or other document ("Offering Documents")
or the omission or alleged omission therefrom of a material
fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not
misleading or any breach of the representations, warranties or
covenants of the Company set forth therein unless any such
untrue statements or material fact, or omission was made or
omitted, as the case may be, based upon information provided
by, and with the actual knowledge of, Consultant."
11. Section 9(d) is hereby amended and replaced in full with the
following language:
"(d) Each Company and its subsidiaries, jointly and severally,
shall defend, indemnify and hold harmless the Indemnified Parties from
and against any and all Loss arising out of any claim by any third
persons with respect to, or in any way related to, this Agreement,
including the Amendment (including reasonable attorney's fees)
(collectively, the "Claims") resulting from any act or omission of any
member of the Consultant Group other than for Claims which shall be
proven in a court of competent jurisdiction to be the direct result of
willful misconduct by any member of the Consultant Group acting within
the scope of their authority."
12. Section 15 is hereby amended and replaced in full with the
following language:
"15. Termination. No party may terminate this
Agreement prior to the expiration of its Term except in accordance with
this Section 15. In the event of a material breach of the provisions
of this Agreement by any party, the non-breaching party promptly
will give written notice to the other parties detailing the breach. If
the breaching party fails to cure or terminate the activity giving rise
to
5
the breach within 30 days after written notice provided to the
breaching party, the non-breaching party shall have the right to
terminate this Agreement. If this Agreement is terminated by the
Company as a result of the breach by Consultant, the Company shall pay
Consultant only the fees earned by Consultant under Subsection
4(b)(i)(A) in accordance with Subsection 4(b)(ii) and will have no
further obligation to pay the Monthly Fee or any fees under Subsection
4(b)(i)(B)."
13. Section 17 is hereby revised to substitute Bainbridge
Advisors, LLC with Bainbridge Advisors, Inc.
14. Except as otherwise modified by this Amendment, all terms and
conditions of the Agreement shall continue in full force and effect.
IN WITNESS WHEREOF, the parties hereby execute this Amendment on the
date set forth in the introductory paragraph.
TARPON INDUSTRIES, INC.
/s/ Xxxxx Xxxxxxxx
-------------------------------
By: Xxxxx Xxxxxxxx
Its: Chairman
BST ACQUISITION, LTD
/s/ Xxxxx Xxxxxxxx
-------------------------------
By: Xxxxx Xxxxxxxx
Its: Chairman
BAINBRIDGE ADVISORS, INC.
/s/ Xxxx X. Xxxxx
-------------------------------
By: Xxxx X. Xxxxx
Its: President
6
