Exhibit 10.81
FINANCIAL CONSULTING AND INVESTMENT BANKING AGREEMENT
THIS AGREEMENT is made as of this 22nd day of January, 1999 by and between
XXXXXXXX TECHNOLOGIES INC., a Delaware corporation having its principal office
at 0 Xxxxxxx Xxxx, Xxxxxxxx X, Xxxxxxxxx, XX 00000 (the "Company"), and
XXXXXXXXX SECURITIES, INC., a Colorado corporation having an office at 0000
Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxx 00000 ("SSI").
In consideration of the mutual premises contained herein and on the terms
and conditions hereinafter set forth, the Company and SSI agree as follows:
1. PROVISION OF SERVICES. The Company hereby retains SSI to perform
non-exclusive consulting services related to corporate finance and investment
banking matters, and SSI hereby accepts such retention and shall undertake all
reasonable efforts to perform for the Company the duties described herein. In
this regard, SSI shall devote such time and attention to the business of the
Company as shall be determined by SSI, in its sole discretion.
(a) SSI agrees, to the extent reasonably required in the conduct of the
business of the Company, and at the Company's written request to SSI's Senior
Vice President of Corporate Finance (or such other person designated by SSI), to
place at the disposal of the Company its judgment and experience and to provide
business development services to the Company including the following:
(i) advice with regard to stockholder relations and public relations
matters, and
(ii) evaluation of financial matters and assistance in financial
arrangements and investment banking and/or transactions.
(b) SSI agrees to prepare and disseminate, or cause the preparation and
dissemination of, a "Corporate Profile" and/or "Research Report" in compliance
with applicable state and federal securities laws, within ninety (90) days of
the date hereof. SSI shall cause such Research Report or Corporate Profile to be
updated, as warranted, in SSI's sole discretion.
(c) At SSI's request, the Company will provide "due diligence"
presentations to Registered Representatives of SSI and other brokerage firms.
SSI agrees to use reasonable efforts to arrange such meetings.
(d) SSI shall undertake at least one "road show" in Europe, the purpose of
which is to introduce the Company to potential institutional investors. The
timing of this "road show" shall be the sole discretion of SSI, but in no case
later than 15 months from the date of this Agreement. The Company shall make its
CEO and Chairman of the Board of Directors available for this "road show". SSI
shall pay for its expenses associated with this "road show" and the Company
shall be responsible for its expenses associated therewith.
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(e) SSI shall undertake, on a best efforts basis, financing activities
seeking to raise up to $2,000,000 in equity capital for the Company upon terms
and conditions to be determined mutually by SSI and the Company (the "Equity
Offering"). SSI's compensation for the Equity Offering will be determined at the
time of such financing; however, SSI's compensation for such equity financing
shall be limited to cash compensation in the form of an underwriting concession
in an amount to be negotiated, but in any event it shall not exceed 10% of the
total dollar amount raised by SSI.
(d) Notwithstanding the foregoing, SSI shall provide general services to
the Company in connection with mergers, acquisitions, consolidations, joint
ventures and similar corporate finance transactions; however, for each such
specific transaction or transactions, SSI and the Company will formalize their
arrangement in a separate agreement at the time specific service is provided.
(e) SSI shall use reasonable efforts in furnishing advice recommendations,
and for this purpose SSI shall at all times maintain or keep and make available
qualified personnel or a network of qualified outside professionals for the
performance of its obligations under this Agreement, at its sole expense. To the
extent reasonably practicable, SSI shall so use its own personnel rather than
outside professionals.
(f) The Company shall use reasonable efforts to invite a representative
appointed by SSI to attend and participate in at least one meeting of its Board
of Directors for every year that this Agreement is in effect. The Company shall
provide notice of such meetings to SSI at least two (2) weeks prior to the date
that the meeting is scheduled to occur. SSI will use its reasonable efforts to
attend any other meetings of the Company's Board of Directors to which the
Company requests SSI's attendance. Any expenses incurred by SSI in attending
such meetings shall be borne for by SSI.
2. TERM. Unless otherwise provided for in this Agreement, SSI's retention
hereunder shall be for a term of two (2) years commencing on the date of this
Agreement and expiring on the second anniversary date of this Agreement (the
"Termination Date"). Except as provided for in paragraph 8 below, SSI may not
terminate this Agreement without the written consent of the Company prior to the
Termination Date. In the event that the Company desires to terminate this
Agreement, without "cause", prior to the Termination Date, it shall provide SSI
with at least sixty (60) days prior written notice of its intention to terminate
this Agreement and this Agreement shall so terminate following the expiration of
this sixty (60) day period, without any further responsibility for either party;
provided, however, that SSI shall be entitled to receive all compensation and
un-reimbursed expenses, if any, outstanding as of the date of termination,
unless such termination is for "cause" as determined by a court of competent
jurisdiction, in which case, the Warrant (as defined below) shall terminate as
to any un-exercised portion thereof.
3. COMPENSATION. In consideration for the services provided by SSI hereunder,
the Company shall:
(a) pay to SSI the sum of $50,000 as follows: $25,000 payable upon the
execution of this Agreement and the remaining $25,000 payable on the first
anniversary date of this Agreement;
(b) issue to SSI 50,000 shares of the Company's common stock which shall
be unregistered and which shall be locked-up for a period of eighteen (18)
months following the date of this Agreement (the "Restricted Stock"), which
Restricted Stock shall be issued with the same privileges and rights as set
forth in paragraph 3(c) (ii), (iii) and (v) below; and
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(c) issue to SSI a warrant (the "Warrant") to purchase up to 250,000
shares of the common stock of the Company (the "Underlying Common Stock") on the
following terms: 100,000 shares at a per share price of $1.00 and an additional
50,000 shares at a per share price of $1.50 (the "First 150,000 Shares), and an
additional 50,000 shares at a per share price of $2.00, and an additional 50,000
shares at a per share price of $2.50 (the "Second 100,000 Shares"). The Warrant
shall be issued to SSI in the form of a warrant agreement (the "Warrant
Agreement") which shall be in form and content satisfactory to SSI. The Warrant
Agreement shall provide for, among other provisions, the following:
(i) that SSI may exercise the Warrant as to the First 150,000 Shares
at any time after the first Anniversary date of the Warrant Agreement and as to
the Second 100,000 Shares at any time after the second anniversary date of this
Agreement. The Warrant shall expire five (5) years from the date that the
Warrant Agreement is issued.
(ii) anti-dilution provisions for stock dividends, splits, mergers,
sale of substantially all of the Company's assets, except for sale of stock
pursuant to the Company's Stock Option Plan(s).
(iii) that, in lieu of any cash payment required by SSI in connection
with the exercise of the Warrant, the holder(s) of the Warrant shall have the
right at any time and from time to time, to exercise the Warrant in full or in
part by surrendering the Warrant Agreement and/or Certificates as payment of the
aggregated Strike Price. The number of shares of Underlying Common Stock to be
issued upon exercise shall be determined by multiplying the number of the shares
of common stock within the Warrant to be exercised by an amount equal to the
market price per share less the Strike Price, and then dividing the product
thereof by the market price per share. Solely for the purposes of this
paragraph, market price shall be calculated as the average of the market prices
for each of the five (5) trading days preceding the date notice is given that
the holder(s) intend(s) to exercise the Warrant.
(iv) that the Company shall reserve, and at all times have available,
a sufficient number of shares of its common stock to be issued upon the exercise
of the Warrant. Furthermore, the Company shall accept, and shall so instruct its
transfer agent to accept, a Rule 144 opinion letter from any attorney (not just
an opinion from the Company's counsel) representing SSI or any of its employees
or agents that are holders of the Warrant.
(v) that the Company shall, subject to the conditions listed below,
grant "piggy back" registration rights to include the shares of the Underlying
Common Stock in any registration statement (except for Form S-4 or S-8 filings,
or any equivalent thereto) filed by the Company under the Securities Act of 1933
relating to an underwriting of the sale of shares of common stock or other
security of the Company. In the event that the Company grants registration
rights to any other stockholder, which stockholder became a stockholder as a
result of the efforts of SSI), on terms and conditions that SSI deems to be more
favorable than those granted hereunder, except for any stockholder from the
Equity Offering, the Company shall grant the same rights to SSI. Furthermore, in
the event that the Company grants registration rights to any other stockholder,
the Company shall issue written notice thereof to SSI at least 10 business days
prior to the date that the Company files any such registration statement.
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4. REPRESENTATIONS AND WARRANTIES OF SSI. SSI represents and warrants that:
(a) it is a securities broker-dealer duly licensed and registered pursuant
to federal and state securities laws rules and regulations;
(b) it has the authority and ability to provide the services contemplated
in this Agreement; and
(c) it is a member in good standing with the NASD and is in good standing
with all states within which it is registered to conduct securities business.
5. INDEMNIFICATION. The Company agree to indemnify and hold harmless SSI and its
affiliates, the respective directors, officers, partners, agents and employees
and each other person, if any, controlling SSI or any of its affiliates
(collectively the "SSI Parties") from all losses, claims, damages, liabilities
and expenses incurred by them (including attorney's fees and disbursements) that
result from any violations of securities laws or rules or any untrue statements
made or any statements omitted to be made in connection with securities related
matters by the Company, its agents or employees. SSI will indemnify and hold
harmless the Company and the respective directors, officers, agents and
employees of the Company (the "Company Parties") from and against all losses,
claims, damages, liabilities and expenses that result from malfeasance, or gross
negligence in the performance of SSI's duties hereunder. Each person or entity
seeking indemnification hereunder shall promptly notify the Company, or SSI as
applicable, of any loss, claim, damage or expense for which the Company or SSI
as applicable, may become liable pursuant to this Section 5. Neither party shall
pay, settle or acknowledge liability under any such claim without the written
consent of the party liable for indemnification, and shall permit the Company or
SSI as applicable a reasonable opportunity to cure any underlying problem or to
mitigate damages. The scope of this indemnification between SSI and the Company
shall be limited to, and pertain only to certain transactions contemplated or
entered into pursuant only to this Agreement.
The Company or SSI, as applicable, shall have the opportunity to defend any
claim for which it may be liable hereunder, provided it notifies the party
claiming the right to indemnification within fifteen (I5) days of notice of the
claim.
6. STATUS OF SSI. SSI shall at all times be an independent contractor of the
Company and, except as expressly provided or authorized in this Agreement, shall
have no authority to act for or represent the Company or bind it to any
agreements.
7. OTHER ACTIVITIES OF SSI. The Company recognizes that SSI now renders and may
continue to render financial consulting, management, investment banking and
other services to other companies that may or may not conduct business and
activities similar to those of the Company. SSI shall be free to render such
advice and other services and the Company hereby consents thereto. SSI shall
not be required to devote its full time and attention to the performance of
its duties under this Agreement, but shall devote only so much of its time
and attention as it deems reasonable or necessary for such purposes, in its
sole discretion.
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8. COVENANTS OF THE COMPANY. The Company covenants, promises and agrees that:
(a)during the term of this Agreement, the Company shall provide SSI at
least thirty (30) days prior written notice of the proposed sale of any
securities of the Company in a "Regulation S" or "Regulation D" offering. Such
notice shall specify the type of securities to be offered, the purchase price
thereof, the terms and conditions of the offering and the proposed offering
date. SSI shall be entitled to immediately terminate this Agreement and retain
all of the compensation set forth herein without offset and with no further
liability to the Company, in the event that, during the term of this Agreement,
the Company completes a sale of its securities pursuant to a Regulation D or S
offering, without SSI's prior written consent thereto.
(b) it shall immediately notify SSI in the event that it is de-listed from
the NASDAQ Small Cap Market.
(c) during the term of this Agreement, the Company shall furnish SSI with
copies of its annual, quarterly and proxy filings with the SEC, immediately upon
the Company's filing thereof.
9. CONTROL. Nothing contained herein shall be deemed to require the Company to
take any action contrary to its Certificate of Incorporation or By-Laws, or any
applicable statute or regulation, or to deprive its Board of Directors of their
responsibility for any control of the affairs of the Company.
10. PUBLIC DISCLOSURE REQUIREMENT. Within thirty (30) business days of the final
execution of this Agreement, the Company shall cause the release of a public
announcement which sets forth, in pertinent part, a description of this
Agreement, including without limitation, the name of SSI, the nature of the
services to be provided hereunder by SSI and the compensation paid to it in
connection herewith. At least three (3) business days prior to the dissemination
of any such public announcement or filing containing the above required
description, the Company shall submit to SSI, for its review and comment, the
proposed public announcement or description. SSI shall thereafter have three (3)
business days within which to submit its editions or amendments to the public
announcement and/or description for inclusion therein, which editions and
amendments shall be incorporated in the final version disseminated by the
Company, unless, in the reasonable judgment of counsel to the Company, such
editions or amendments cannot be incorporated.
11. NOTICES. Any notices hereunder shall be sent to the Company and SSI at their
respective addresses above set forth. Any notice shall be given by registered or
certified mail, postage prepaid, and shall be deemed to have been given when
deposited in the United States mail. Either party may designate any other
address to which notice shall be given, by giving written notice to the other of
such change of address in the manner herein provided.
12. ENTIRE AGREEMENT. This Agreement contains the entire agreement and
understanding between the parties with respect to its subject matter and
supersedes all prior discussion, agreements and understandings between them with
respect thereto. This Agreement may not be modified except in a writing signed
by the parties.
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13. JURISDICTION AND VENUE. This Agreement has been made in the State of
Colorado and shall be governed by and construed in accordance with the laws
thereof without regard to principles of conflict of laws. Any proceeding
commenced by SSI to enforce or interpret any provision of this Agreement may be
brought in the City and County of Denver, Colorado. The Company hereby submits
to the jurisdiction of the courts of the State of Colorado, including the
federal courts, for such purposes.
14. NO ASSIGNMENT. Neither this Agreement nor the rights of either party
hereunder shall be assigned by either party without the prior written consent of
the other party.
15. COUNTERPARTS. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
16. NON-COMPLIANCE. If any provision of this Agreement conflicts with any law,
rule or regulation of any federal, state or self-regulatory organization,
including the Securities and Exchange Commission, the blue-sky laws of any
state, the National Association of Securities Dealers, Inc., or any other
governmental authority having jurisdiction over the activities or services
described herein, then in that event, the Company and SSI shall amend this
Agreement to bring any affected provision into compliance with such regulations.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed the day and year first above written.
XXXXXXXXX SECURITIES, INC. XXXXXXXX TECHNOLOGIES INC.
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