FINANCIAL ADVISORY AND INVESTMENT BANKING AGREEMENT
This Agreement is made and entered into as of the 1st day of January
1997 between GKN Securities Corp. ("GKN" or the "Consultant") and American
Medical Alert Corporation (the "Company").
In consideration of the mutual promises made herein and for other
good valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. The Company hereby engages Consultant for the term specified in
Paragraph 2 hereof to render consulting advice to the Company as an investment
banker relating to financial and similar matters upon the terms and conditions
set forth herein.
2. This Agreement shall commence as of January 1, 1997 and continue
for a term of twelve (12) months.
3. During the term of this Agreement, Consultant shall provide the
Company with such regular and customary consulting advice as is reasonably
requested by the Company, provided that Consultant shall not be required to
undertake duties not reasonably within the scope of the financial advisory or
investment banking services contemplated by this Agreement. It is understood and
acknowledged by the parties that the value of Consultant's advice is not readily
quantifiable, and that although Consultant shall be obligated to render advice
contemplated by this agreement upon the reasonable request of the Company, in
good faith, Consultant shall not be obligated to spend any specific amount of
time in so doing. Consultant's duties may include, but will not necessarily be
limited to, providing recommendations concerning the following financial and
related matters:
A. Disseminating information about the Company to the
investment community at large;
B. Rendering advice and assistance in connection with the
preparation of annual and interim reports and press releases;
C. Assisting in the Company's financial public relations;
D. Arranging, on behalf of the Company, at appropriate times,
meetings with securities analysts;
E. Rendering advice with regard to internal operations,
including:
1. the formation of corporate goals and their
implementation;
2. the Company's financial structure and its
divisions or subsidiaries;
3. securing, when and if necessary and possible,
additional financing through banks and/or
insurance companies; and
4. corporate organization and personnel; and
F. Rendering advice with regard to any of the following
corporate finance
1. changes in the capitalization of the Company;
2. changes in the Company's corporate structure;
3. redistribution of shareholdings of the Company's
stock;
4. offerings of securities in public transactions;
5. sales of securities in private transactions;
6. alternative uses of corporate assets;
7. structure and use of debt; and
8. sales of stock by insiders pursuant to Rule 144 or
otherwise.
In addition to the foregoing, Consultant agrees to furnish advice to
the Company in connection with (i) the acquisition and/or merger of or with
companies, divestiture or any other similar transaction, or the sale of the
Company itself (or any significant percentage), or any material portion of its
assets, or any wholly or partially owned subsidiaries thereof (hereinafter
referred to as a "Transaction"), and (ii) bank financings or any other financing
from financial institutions, including but not limited to lines of credit,
performance bonds, letters of credit, loans or other financings (hereinafter
referred to as a "Bank Financing").
Consultant shall render such other financial advisory and investment
and/or investment banking services as may from time to time be agreed upon by
Consultant and the Company.
4. In consideration for the services rendered by Consultant to the
Company pursuant to this Agreement (and in addition to the expenses provided for
in Paragraph 5 hereof), the Company shall compensate Consultant as follows:
(a) The Company shall pay GKN an annual fee of $30,000
in monthly installments of $2,500, the first payment due upon the execution of
this Agreement.
(b) Upon execution of this Agreement, the Company is
issuing to GKN (or its designees) 50,000 warrants exercisable for a period of
four years commencing one year from the date hereof at an exercise price of
$4.50 per share ("Warrants"). GKN and its designees shall have unlimited "piggy
bank" rights at the Company's cost. The Warrants will be evidenced by a warrant
agreement(s) in the form of Exhibit A hereto.
5. In addition to the above,
(a) In the event that any Transaction consummated by the
Company is originated by Consultant during the term of this Agreement, the
Company shall pay fees to Consultant as follows:
Consideration Fee
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$ -0- to $500,000 Minimum fee of $25,000
$ 500,000 to $5,000,000 5% of Consideration
$ 5,000,000 or more $250,000 plus 2-1/2% of the
Consideration in excess of $5,000,000
If the Company identifies the other party to such a Transaction
during the term of this Agreement, the Company shall pay fees to Consultant to
be mutually agreed upon, but in any event not less than $25,000.
For the purposes of this Agreement, "Consideration" shall mean the
total market value on the day of closing of the Transaction of stock, cash,
assets and all other property (real or personal) exchanged or received or paid,
directly or indirectly, by the Company or any of its security holders in
connection with any Transaction, including without limitation any amounts paid
by the Company or any person or entity to holders of warrants, stock purchase
rights, straight or convertible securities of the Company or any affiliate
thereof, options or stock appreciation rights issued by the Company or any
affiliate thereof, whether or not vested, and to holders of any other securities
of any kind whatsoever of the Company, or pursuant to any employment agreement,
royalty, consulting agreement, covenant not to compete, earnout or contingent
payment right or similar arrangement, agreement or understanding, whether oral
or written; provided, however, that Consideration shall not include that portion
of the monies paid under any employment or consulting agreement or covenant not
to compete which represents the fair market value of the services to be so
provided thereunder. Any co-broker retained by Consultant shall be paid by
Consultant.
(b) In the event Consultant originates a Bank Financing,
the Company and Consultant will mutually agree on a satisfactory fee and the
terms of payment of such fee.
(c) In the event Consultant directly or indirectly
introduces the Company to a joint venture partner or customer and sales develop
as a result of the introduction, the Company agrees to pay a fee of two percent
(2%) of net cash revenues generated directly from this introduction during the
first two years following the date of the first sale, or such other
compensation as shall be mutually agreed to. Commission payments shall be paid
on the 15th day of each month following the receipt of customers' payment. In
the event any adjustments are made to the total sales after the commissions has
been paid, the Company shall be entitled to an appropriate refund or credit
against future payments due under this Agreement.
(d) If Consultant acts as an underwriter or placement
agent in the sale or distribution of securities by the Company to the public or
in a private transaction, Consultant shall receive, as compensation for services
rendered, such compensation as may be agreed upon by the Company and the
Consultant.
(e) In the event the Company engages the Consultant to
act as its agent for the solicitation of the exercise of its outstanding
Warrants, the Company will, subject to the rules and regulations of the NASD,
pay GKN a commission equal to 5% of the exercise price for each Warrant exercise
if the exercise was solicited by GKN. The Company and GKN may enter into a more
formal warrant solicitation agreement if both determine it is necessary to do
so.
(f) Fees and expenses payable to Consultant with regard
to fairness opinions and valuations will be determined by mutual agreement at
such time as the nature and terms of such financing are affirmed.
All fees to be paid pursuant to this Agreement, except as otherwise
specified, are due and payable to Consultant in cash at the closing or closings
of any transaction specified in Paragraph 5 hereof, except when the Company has
not actually received the Consideration (i.e., payment is deferred because of
the terms of a note, or is not paid because of a contingency or earnout), in
which case the Consultant shall be paid when and if the Company is paid. In the
event that this Agreement shall not be renewed or if it is terminated for any
reason, then notwithstanding any such non-renewal or termination, Consultant
shall be entitled to a full fee (payable in accordance with the preceding
sentence) as provided under Paragraph 5 hereof, for any transaction for which
the discussions or introductions were initiated during the term of this
Agreement and which was consummated within 12 months of the termination of this
Agreement.
6. In addition to the fees payable hereunder, and regardless whether
any transaction set forth in Paragraph 5 hereof is proposed or consummated, the
Company shall reimburse Consultant for all reasonable travel and out-of-pocket
expenses incurred in connection with the services performed by Consultant
pursuant to this Agreement; provided, however, that Consultant shall incur no
expense in excess of $250 without Company's consent.
7. (a) The Company acknowledges that all opinions and advice
(written or oral) given by Consultant to the Company in connection with the
Consultant's engagement are intended solely for the benefit and use of the
Company in considering the transaction to which they relate, and the Company
agrees that no person or entity other than the Company shall be entitled to make
use of or rely upon the advice of Consultant to be given hereunder, and no such
opinion or advice shall be used for any manner or purpose, nor may the Company
make any public references to the Consultant or use any of Consultant's names in
any annual reports or any other reports or releases of the Company without
Consultant's prior written consent, which shall not be unreasonably withheld.
Notwithstanding the foregoing, the Company man, to the extent counsel
advises it that it is legally required to do so, disclose GKN's name and a
description of this Agreement in the Company's press releases and governmental
filings.
(b) The Company acknowledges that Consultant makes no
commitment whatsoever as to making a market in the Company's securities or to
recommending or advising its clients to purchase the Company's securities.
Research reports or corporate finance reports ("Reports") that may be prepared
by Consultant will, when and if prepared, be done solely on the merits or
judgment of analysis of Consultant or any senior corporate finance or research
personnel of Consultant. Any such Reports will be delivered to the Company
before public dissemination. The Company will be given an opportunity to correct
any errors in such Reports.
8. Consultant will hold in confidence any confidential information
which the Company provides to Consultant pursuant to this Agreement and will
return all such confidential information promptly after the Company's request
for same. Notwithstanding the foregoing, Consultant shall not be required to
maintain confidentiality with respect to information (i) which is or becomes
part of the public domain not due to the breach of this Agreement by Consultant;
(ii) of which it had independent knowledge prior to disclosure; (iii) which
comes into the possession of Consultant in the normal and routine course of its
own business from and through independent non-confidential sources; (iv) which
is required to be disclosed by Consultant by laws, rules or regulators. If
Consultant is requested or required (by oral questions, interrogatories,
requests for information or document subpoenas, civil investigative demands, or
similar process) to disclose any confidential information supplied to it by the
Company, or the existence of other negotiations in the course of its dealings
with the Company or its representatives, Consultant shall, unless prohibited by
law, promptly notify the Company of such request(s) so that the Company may seek
an appropriate protective order. This paragraph shall survive termination of
this Agreement.
9. The Company acknowledges that Consultant or its affiliates are in
the business of providing financial services and consulting advice to others.
Nothing herein contained shall be construed to limit or resist Consultant in
conducting such business with respect to others, or in rendering such advice to
others. Notwithstanding the foregoing, if GKN is engaged in any capacity by a
company whose primary business is providing personal emergency response systems
services ("Competitor"), GKN will promptly notify the Company of such engagement
and the Company shall have the right to terminate this Agreement upon five days
notice to GKN ("Competitive Termination"). GKN represents and warrants that, as
of the date hereof, it has not been engaged by (nor entered into discussions
with respect to such engagement with) any Competitor.
10. The Company recognizes and confirms that, in advising the
Company and in fulfilling its engagement hereunder, Consultant will use and rely
on data, material and other information furnished to Consultant by the Company.
The Company acknowledges and agrees that in performing its services under this
engagement, Consultant may rely upon the data, material and other information
supplied by the Company without independently verifying the accuracy,
completeness or veracity of same.
11. The Company agrees to indemnify and hold harmless GKN, its
employees, agents, representatives and controlling persons (and the officers,
directors, employees, agents,
representatives and controlling persons of each of them) from and against any
and all losses, claims, damages, liabilities, reasonable costs and expenses (and
all actions, suits, proceedings or claims in respect thereof) and any reasonable
legal or other expenses in giving testimony or furnishing documents in response
to a subpoena or otherwise (including, without limitation, reasonable attorney
fees and the cost of investigating, preparing or defending any such action,
suit, proceeding or claim, whether or not in connection with any action, suit,
proceeding or claim in which GKN is a party), as and when incurred, directly or
indirectly caused by, relating to, based upon or arising out of GKN's services
pursuant to this Agreement so long as GKN shall not have engaged in intentional
or willful misconduct, or shall have acted grossly negligent ("GKN Acts"), in
connection with the services provided which form the basis of the claim for
indemnification. GKN agrees to indemnify and hold harmless the Company from all
GKN Acts on the same terms as the Company's indemnification of GKN. This
paragraph shall survive the termination of this Agreement.
12. Consultant shall perform its services hereunder as an
independent contractor and not as an employee of the Company or an affiliate
thereof. It is expressly understood and agreed to by the parties hereto that
Consultant shall have no authority to act for, represent or bind the Company or
any affiliate thereof in any manner, except as may be agreed to expressly by the
Company in writing from time to time.
(a) This Agreement between the Company and Consultant
constitutes the entire agreement between the parties with respect to the subject
matter hereof.
(b) No provision of this Agreement may be amended,
modified or waived, except in writing signed by all of the parties hereto.
(c) This Agreement shall be binding upon and inure to
the benefit of each of the parties hereto and their respective successors, legal
representatives and assigns.
(d) This Agreement may be executed in any number of
counterparts, each of which together shall constitute one and the same original
documents.
(e) In the event of any dispute under this Agreement,
then and in such event, each party hereto agrees that the same shall be
submitted to the American Arbitration Association in the City of New York, for
its decision and determination in accordance with its rules and regulations then
in effect. Each of the parties agrees that the decision and/or award made by the
Association may be entered as judgement of the Courts or the State of New York,
and shall be enforceable as such.
(f) This Agreement shall be construed and enforced in
accordance with the laws of the State of New York, without giving effect to
conflict of laws.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, as of the day and year first above written.
GKN SECURITIES CORP. AMERICAN MEDICAL ALERT CORP.
By: /S/XXXXXX XXXXXXXXXXX By: /S/XXXXXX X. XXXXXX
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Xxxxxx Xxxxxxxxxxx Xxxxxx X. Xxxxxx
Executive Vice President Chairman and Chief Executive Officer
