Exhibit 10.10
Health Business Partners
Xx. Xxxxxx Xxxxxxxxx
President and Chief Executive Officer
Bio-One Corporation
0000 Xxxxxx Xxxxxxx Xxxxxxxxx
Xxxxxx Xxxxxxx, Xxxxxxx 00000
Dated as of June 20, 2003
FINANCIAL CONSULTING AGREEMENT
Health Business Partners LLC ("HBP") is pleased to act as a consultant to
Bio-One Corporation. ("BIO-ONE" or the "Company") in connection with a potential
acquisition of the assets or equity of one and ideally more than one nutrition
company, (collectively, a "Transaction"). This letter agreement (the
"Agreement") sets forth the representations of the parties, the services that
HBP agrees to perform for BIO-ONE, the authority and power granted by the
Company to HBP, the fees for HBP's services, and other terms and conditions that
will govern the parties' relationship. This Agreement cannot be changed orally
and no provision of this Agreement shall in any respect be waived, altered,
modified or amended unless agreed to in writing by both parties.
1. ENGAGEMENT. Until this Agreement has been terminated under Section 4, HBP
is hereby engaged to render consulting services to BIO-ONE in connection
with a potential Transaction involving the Company and another corporation,
business entity, or individual (collectively, a "Target"). A Transaction
means the sale, exchange, change of ownership or other transfer of more
than 5% of the assets or equity securities of a Target. A Transaction also
means, without limitation, a joint venture or business alliance between the
Company and a Target to which the Company or a Target contributes more than
5% of either of their assets, equity securities, or combination of assets
and equity securities.
THE PRIMARY INITIAL OBJECTIVE IS TO ACQUIRE A COMPANY IN A TRANSACTION IN
WHICH THE CONSIDERATION IS DELIVERED MOSTLY IN THE FORM OF BIO-ONE STOCK.
HOWEVER, THE COMPANY RECOGNIZES THAT OTHER FORMS OF TRANSACTION MAY ALSO BE
APPROPRIATE AND ARE COVERED BY THIS AGREEMENT.
During the term of HBP's engagement by BIO-ONE, BIO-ONE will keep HBP
informed about all substantive discussions of any Transactions in which it
is involved. BIO-ONE shall (i) refer any inquiry regarding a possible
Transaction during the term of HBP's engagement to HBP to enable HBP to
evaluate the prospective target and (ii) the Company and HBP will work
together in any resulting discussion regarding a potential Transaction.
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2. SERVICES. HBP's services will include: identifying and researching
appropriate acquisition candidates and working with senior management of
BIO-ONE to acquire the appropriate companies through the following:
>> Initiating discussions with prospective Targets
>> Assisting the Company in preparing for presentations to the management
and/or Boards of prospective Targets concerning the attractions of a
Transaction
>> Assisting in negotiating satisfactory terms and conditions of any
transaction on BIO-ONE's behalf with such potential target companies
>> Evaluating any transaction that develops, including a comparison of
such opportunities with other alternatives
>> Assisting BIO-ONE in preparing presentations to its Board; and
>> Advising and assisting BIO-ONE in the course of its due diligence
efforts and other tasks as may be agreed to from time to time by
BIO-ONE and HBP.
Any advice rendered by HBP pursuant to this Agreement is only for internal
use by BIO-ONE and shall not be disclosed by BIO-ONE without HBP's written
consent, unless disclosure is required by law. HBP's advice and assistance
will not encompass legal or tax issues as to which BIO-ONE should consult
its attorneys and financial advisors.
3. COMPENSATION. BIO-ONE agrees to pay HBP the following fees in respect of
such services:
a. Retainer
During the Term of this agreement, $6,000 payable in advance, each 30 days
upon the signing of this agreement until such earlier time as the payment
provided for in clause 3c. below, is made or this agreement is terminated,
provided however, that the Company, at a minimum, shall be obligated for
payments under this clause totaling $24,000; plus
b. Daily Fees
If, in any 30 day period, during the Term, Xxx Xxxxxxx is engaged on the
assignment for more than 3 1/2 days (a day to consist of a minimum of 8
hours), then an additional pro rata fee will be due of $1,800 per day,
subject to a maximum of $5,400 in each 30 days.
If, in any 30 day period, after the Term, Xxx Xxxxxxx is engaged on the
assignment at the request of the Company for more than 1 full day (a day to
consist of a minimum of 9 hours), then an additional fee will be due of
$1,500 per day.
With regard to both retainer and daily fees, HBP will have the option at
any time of being paid in "144" stock and at a 20% discount from the
previous 90 day daily trading average. The restricted stock would carry the
same issue date as the execution date of this Agreement.
c. Transaction Fee or Fees
In the event that a definitive agreement for a transaction is executed with
any Target in connection with which there was an HBP involvement other than
VitaRich or MDR, before October 8, 2003, then the Transaction fee due to
HBP will be as stated in the agreement dated October 31, 2001.
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In the event that a (i) a definitive agreement for a Transaction is executed
during the Term (as defined in Section 4) but after October 8, 2003, or (ii) if
a definitive agreement is executed within eighteen months following the
expiration of the term, with a target that HBP identified, the Company agrees to
pay HBP non-refundable Transaction Fees as follows:
---------------------------------- --------------------------------------------------------
AGGREGATE CONSIDERATION TRANSACTION FEE
---------------------------------- --------------------------------------------------------
From To Fee for range Cumulative fee at top of range
----------------- ---------------- ------------------ -------------------------------------
$0 $1 Million 5% $50,000
----------------- ---------------- ------------------ -------------------------------------
$1 Million $2 Million 4% $90,000
----------------- ---------------- ------------------ -------------------------------------
$2 Million $3 Million 3% $120,000
----------------- ---------------- ------------------ -------------------------------------
$3 Million And above 2% Not applicable
----------------- ---------------- ------------------ -------------------------------------
EXAMPLES OF FEES
For example, if the Aggregate Consideration is $4.5 million, the Transaction Fee
shall be $150,000 consisting of (i) $120,000 for the Aggregate Consideration up
to $3 million plus (ii) 2% of the incremental Aggregate Consideration over $3
million ($30,000).
Should Bio-One complete any Transaction during the Term, or within nine months
following the expiration of the term whether before or after October 8, 2003,
with any company or companies not identified by HBP, then the above fee
structure will be applied but the resulting Transaction Fee will be halved.
Should Bio-One complete more than one Transaction, the Transaction Fee will
apply to each Transaction separately.
The Transaction Fee will be paid as follows:
50% in cash within 30 days of closing of a Transaction.
On the balance of fees earned HBP will have the option of being paid in "144"
stock and at a 20% discount from the previous 90 day daily trading average, or
up to 50% in cash and the balance in "144" stock. The restricted stock would
carry the same issue date as the execution date of this Agreement.
In the event that any portion of the cash fee due is not available for payment,
then that portion will be paid no later than six months from the closing of the
Transaction.
Investment in or Sale of Assets or Stock
Aggregate Consideration shall mean (x) in the case of a Transaction in which
BIO-ONE makes an investment in a target company, the total amount of funds
invested (or if pursuant to an irrevocable commitment which may be drawn down at
the election of the target company, the total amount of the irrevocable funding
commitment) and (y) in the case of a Transaction involving the Company acquiring
the capital stock or assets of a target company, the total amount of cash and
the fair market value of all other assets paid or payable to the target company
and/or its security holders, key employees (including more than market rate
compensation), subsidiaries, or affiliates (including the net amount, determined
on a GAAP basis, of any debt assumed, taken subject to, repaid or refinanced and
any deferred payments, including earn outs), directly or indirectly by the
Company. In the event of a deferred payment a discount rate of 6% will be used
to determine the fees payable.
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Joint Venture/Alliance
If the Transaction shall take the form of a joint venture or business alliance,
then the Aggregate Consideration shall mean the total amount of any cash and the
fair market value of any assets paid or contributed or payable and contributable
by BIO-ONE and/or the Target directly or indirectly to such joint venture or
business alliance.
In the event that the consideration received in a Transaction is paid in whole
or in part in the form of securities, the value of such securities, for purposes
of calculating a Transaction Fee, shall be the fair market value thereof, as the
parties hereto shall mutually agree (i) on the date of closing of a Transaction
with respect to securities that are transferred on the date of closing of a
Transaction, and (ii) on the date the securities are transferred with respect to
any securities transferred after the date of closing of a Transaction; provided,
however, that if such securities consist of securities with an existing trading
market, the value thereof shall be determined by the average of the sale price
for such securities on the twenty last trading days prior to the date on which
the Transaction is consummated.
If following, or in connection with, the termination or abandonment of any
proposed Transaction, the Company receives a so-called "break-up,"
"termination," or similar fee or payment (the "Break-Up Fee"), HBP shall be
entitled to a cash fee equal to 35% of the excess (if any) of the aggregate
amount of such Break-Up Fee (including, without limitation, any amount
characterized as an expense reimbursement) over the direct out-of-pocket
expenses incurred by the Company in connection with a Transaction (including,
without limitation, financing fees and legal fees, but excluding any fees
payable pursuant to this break-up fee), and payable within 10 days following the
Company's receipt of such fee or payment.
TERM OF ENGAGEMENT. The engagement shall be for a period of four months unless
terminated prior to that date or extended in accordance with the provisions of
this section (the "Term"), and commencing on June 22, 2003. At any time during
the Term, BIO-ONE and HBP may terminate or extend the Term. Either party may
terminate this Agreement upon fourteen (14) days written notice to the other
party. Notwithstanding the foregoing, the provisions contained in Sections 3, 5,
6, 7, 8, 9, 10, 11, 12 and 13 shall survive any termination under this Section
4.
REIMBURSEMENT OF EXPENSES. BIO-ONE shall reimburse HBP for reasonable invoiced
out-of-pocket expenses, including travel, hotel, data acquisition, production,
communication and legal expenses on a current basis upon the request of HBP from
time to time. Any single expense exceeding $500 shall require prior approval.
However, such reimbursement shall not exceed $4,000 per month without the prior
approval of BIO-ONE. Such reimbursement will be paid regardless of whether a
Transaction is consummated.
BIO-ONE TO COOPERATE. In acting as BIO-ONE's financial advisor, HBP will assist
BIO-ONE in preparing such descriptive information as we mutually deem
appropriate. HBP will necessarily rely on information provided by BIO-ONE in the
preparation of such documents, including information regarding historical and
projected financial performance in order to describe the Company and its plans
accurately to third parties. If required, BIO-ONE will warrant the accuracy and
completeness of the historical information and reasonableness of projections
furnished to HBP, at the time furnished, and will further advise HBP during the
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period of our assignment of all developments materially affecting BIO-ONE. A
representative of BIO-ONE will read any descriptive information prepared by HBP
and will represent and warrant to HBP that such information does not contain
untrue statements or omit any material fact relating to BIO-ONE that should be
disclosed.
ADVERTISING AND PRESS RELEASES. BIO-ONE will permit HBP, at HBP's expense, and
subject to BIO-ONE's prior approval not to be unreasonably withheld, to
advertise with a public "tombstone" announcing consummation of a Transaction.
Any Press Release to be made regarding this agreement will only be made by
mutual agreement with regard to wording and timing. Agreement not to be
unreasonably withheld.
CONFIDENTIALITY. Any advice rendered by HBP pursuant to this Agreement is only
for internal use by BIO-ONE and shall not be disclosed by BIO-ONE without HBP's
written consent, unless such disclosure is required by law. HBP agrees to hold
in strict confidence all material non-public information provided to it by
BIO-ONE, unless disclosure is required by law or is reasonably necessary for HBP
to perform its services hereunder.
INDEMNITY. HBP and BIO-ONE have entered into a separate letter agreement, dated
to the date hereof (the "Indemnity Letter"), providing for the indemnification
of HBP by BIO-ONE in connection with HBP's engagement hereunder.
ARBITRATION. Any legal proceedings between the parties relating to this
Agreement or any alleged breach thereof shall be settled by a binding
arbitration with a panel of three arbitrators in Providence, Rhode Island in
accordance with the rules of the American Arbitration Association, and judgments
upon the award rendered by the arbitrators shall be entered in any court having
competent jurisdiction.
NOTICES. All communications provided for hereunder shall be sent by first class
mail, facsimile or personal delivery (by hand or by professional courier
service) addressed to (i) BIO-ONE at 0000 Xxxxxx Xxxxxxx Xxxxxxxxx, Xxxxxx
Xxxxxxx, Xxxxxxx 00000 (Attn: President) (ii) to HBP at 0000 Xxxx Xxxx, Xxxxx 0,
XX 00000, Facsimile (401-885-4686) (Attn: Xxx Xxxxxxx, Managing Director) or
(iii) to such other address with respect to any party as such party shall be
designated by written notice to the others in the manner described herein. If
such communication is delivered personally or by facsimile, such communication
shall be conclusively deemed to have been given at the time of receipt thereof
or refusal of delivery thereof, as evidenced by the records of the person or
entity making such personal delivery or by mechanical confirmation of facsimile
transmission. If such communication is given by mail, such communication shall
be conclusively deemed to have been given on the third business day after the
deposit thereof in the United States mail, postage prepaid, addressed to the
party to whom such communication is to be given.
7. FINAL AGREEMENT. This Agreement constitutes the entire understanding among
the parties with respect to the subject matter contained herein.
8. MISCELLANEOUS. During the Term of this Agreement, BIO-ONE agrees to retain
HBP on an exclusive basis to perform the services described.
This Agreement shall be governed by, and construed in accordance with, the laws
of the State of Rhode Island applicable to agreements made and to be performed
entirely in the State of Rhode Island without regard to principles of conflicts
of laws. If any provision of this Agreement shall be determined to be invalid or
unenforceable in any respect, such determination shall not affect such provision
in any other respect or any other provision of this Agreement, which shall
remain in full force and effect. BIO-ONE agrees to the jurisdiction and venue of
the federal and state courts in Rhode Island for any disputes arising under this
Agreement.
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BIO-ONE and HBP each represent and warrant that it has all requisite power and
authority, and all necessary authorization, to enter into and carry out the
terms and provisions of this Agreement.
HEALTH BUSINESS PARTNERS
0000 XXXX XXXX, XXXXX 0
XXXXXXX XX 00000
BY: _______________________________
XXX X. XXXXXXX
MANAGING DIRECTOR
ACCEPTED AND AGREED TO AS OF
THE DATE FIRST WRITTEN ABOVE.
BIO-ONE, CORPORATION
0000 XXXXXX XXXXXXX XXXXXXXXX
XXXXXX XXXXXXX, XXXXXXX 00000
BY: /s/ Xxxxxx Xxxxxxxxx
XXXXXX XXXXXXXXX
PRESIDENT & CEO
