CONSULTING AGREEMENT
This agreement ("Agreement") is made and entered into this 15th day of
October, 2001 between Isonics Corporation, a California corporation (the
"Company"), and Xxxxx Investment Group ("WIG"). For good and valuable
consideration (the sufficiency and receipt of which is hereby acknowledged) the
Company and WIG hereto mutually agree and intend to be legally bound for
themselves and their respective heirs, legal representatives, successors and
assigns to the terms of this Agreement.
1. PURPOSE. The Company hereby retains WIG on a non-exclusive basis
during the term specified to render consulting advice to the Company relating to
financial and similar matters, upon the terms and conditions as set forth
herein.
2. ENGAGEMENT PERIOD. This Agreement shall be effective for a period of
four years commencing on the date first written above (the "Engagement Period"),
provided however, that WIG may terminate this Agreement in accordance with
Section 8 herein.
COMPENSATION. The Company shall pay to WIG a fee of $15,00 plus 50,000 warrants
exercisable at $1.50 per share. These warrants shall be issued and considered
earned immediately upon acceptance of this contract. The warrants will have a
cashless exercise provision, be non-cancelable and have a four year life. The
first payment of $7,500 will be due immediately upon acceptance of this
contract, and a second payment of $7,500 will be owed, but not due until three
months from the date of this agreement or ten (10) days after Isonic's receives
proceeds from a financing of at least $500,000. WIG may, in its discretion,
distribute the warrants to its employees and/or consultants.
The company grants piggy-back registration rights for the underlying
shares and agrees to include the shares in an S-3 or other suitable form at
the earliest possible time.
3. DUTIES OF WIG. During the term of this Agreement, WIG will provide the
Company with:
A thorough analysis of the Company from the standpoint of a significant
investor with particular attention to the future of the Company's SOI wafer
and Si-28 product lines, the expected revenue and profit for the Company
over a three year horizon, and the resource requirements to achieve these
targets. It is the intent that such analysis shall become the basis of a
due diligence study to be useful to a potential investor and a research
report that could be issued by a brokerage firm;
In connection with WIG providing the Consulting service to the Company, the
Company shall provide WIG with any available information that WIG deems
appropriate. The Company hereby acknowledges that WIG will be using and relying
on some of said information without independent verification and that WIG
assumes no responsibility for the accuracy and completeness of any information
provided to it by the Company. Should the Company desire WIG to provide any
further financial advisory services beyond what is contemplated hereby, the
Company and WIG shall enter into an additional engagement letter to be executed
by the parties hereto at the commencement of the additional financial advisory
services to be rendered by WIG and WIG's compensation for such services shall be
set forth therein.
5. WIG'S RELATIONSHIPS WITH OTHERS. The Company acknowledges that WIG and
its affiliates are
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in the business of providing financial services and consulting advice (of all
types contemplated by this Agreement) to others. Nothing contained herein shall
be construed to limit or restrict WIG in conducting such business with respect
to others, or in rendering such advise to others.
6. CONFIDENTIAL MATERIAL. In connection with the rendering of services
hereunder, WIG has been or will be furnished with confidential information
concerning the Company including, but not limited to, financial statements and
information, cost and expense data, production data, trade secrets, marketing
and customer data, and such other information not generally obtained from public
or published information or trade sources. Such information shall be deemed
"Confidential Material" and, except as specifically provided herein, shall not
be disclosed by WIG without prior written consent of the Company. In the event
WIG is required by applicable law or legal process to disclose any of the
Confidential Material, it is agreed that WIG will deliver to the Company prompt
notice of such requirement prior to disclosure of same to permit the Company to
seek an appropriate protective order and/or waive compliance of this provision.
If, in the absence of a protective order or receipt of written waiver, WIG is
nonetheless, in the written opinion of its counsel, compelled to disclose any
Confidential Material, WIG may do so without liability hereunder provided that
notice of such prospective disclosure is delivered to the Company prior to
actual disclosure. Following the termination of this Agreement and a written
request by the Company, WIG shall deliver to the Company all Confidential
Material.
7. WIG'S LIABILITY & INDEMNIFICATION OF WIG BY COMPANY. In the absence of
gross negligence or willful misconduct on the part of WIG or WIG's material
breach of this Agreement, WIG shall not be liable to the Company or to any
officer, director, employee, agent, representative, stockholder or creditor of
the Company for any action or omission of WIG or any of its officers, directors,
employees, agents, representatives or stockholders in the course of, or in
connection with, rendering or performing any services hereunder. Any such
liability of WIG shall be limited to the aggregate fees received by WIG
hereunder, which shall not include any liability for incidental, consequential
or punitive damages. The Company agrees to indemnify WIG in accordance with the
provisions of Annex A hereto, which is incorporated by reference in its entirety
and made a part hereof.
8. TERMINATION. This Agreement may be terminated at any time during the
Engagement Period by WIG upon five (5) days prior written notice to the Company,
in the event that WIG becomes aware of (i) any change in the business or
operations of the Company which WIG reasonably believes may adversely affect
WIG's ability to render the services contemplated hereunder, (ii) any
misrepresentation by the Company with respect to the business operations,
assets, condition (financial or otherwise), results of operations or prospects
of the Company, or (iii) any breach by the Company of its obligations under this
Agreement.
This Agreement may be terminated by the Company for any reason upon five
(5) days prior written notice to WIG.
In the event of termination, this Agreement shall become void, without
liability on the part of WIG or its affiliates, directors, officers or
stockholders and WIG shall be entitled to retain or receive compensation for
services it has rendered, including payment for expenses it has incurred up to
the date of such termination.
9. EXPENSES. The Company shall reimburse WIG for any and all reasonable
out-of-pocket expenses incurred in connection with services provided to the
Company under this Agreement including, but not limited to travel, legal fees,
printing, and other expenses, incurred in connection with WIG's
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providing the services stated or contemplated hereby. With the exception of out
of pocket expenses, WIG will obtain the prior approval of the Company for
expenses in excess of $1,000. WIG shall invoice Company on a monthly basis for
all expenses but the Company shall not be obligated to pay WIG until ten (10)
days after receipt of the proceeds from a financing of at least $500,000.
12. LIMITATION UPON THE USE OF ADVICE AND SERVICES.
(a) No person or entity, other than the Company or any of its subsidiaries
or directors or officers of each of the foregoing, shall be entitled
to make use of or rely upon the advice of WIG to be given hereunder,
and the Company shall not transmit such advice to, or encourage or
facilitate the use or reliance upon such advice by others without the
prior consent of WIG.
(b) Use of the WIG's name in annual reports or any other report of the
Company or releases by the Company require the prior written approval
of WIG unless the Company is required by law to include WIG's name in
such annual reports, other report or release of the Company, in which
event the Company shall furnish WIG with copies of such annual reports
or other reports or releases using WIG's name in advance of
publication by the Company, its affiliates or assigns.
13. DISCRETION. Nothing contained herein shall require the Company to
enter into any transaction presented to it by WIG, which decision shall be at
the Company's sole discretion.
14. SEVERABILITY. Any term or provision of this Agreement which is invalid
or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
15. MISCELLANEOUS.
(a) Any notice or other communication between parties hereto shall be
sufficiently given if sent by certified or registered mail, postage
prepaid, or faxed and confirmed if to the Company, addressed to it at
Isonics Corporation, 0000 XxXxxxxx Xxxxxx Xxxxxx, Xxxxxxxx 00000, or
if to WIG, addressed to it at Xxxxx Investment Group, 000 Xxxxxxxxxx
Xxxxx #000, Xxxxxx, XX 00000. Such notice or other communication shall
be deemed to be given on the date of receipt.
(b) If WIG shall cease to do business, the provisions hereof relating to
duties of WIG and compensation by the Company as it applies to WIG
shall thereupon cease to be in effect, except for the Company's
obligation of payment for services rendered prior thereto. This
Agreement shall survive any merger of, acquisition of, or acquisition
by WIG and after any such merger or acquisition shall be binding upon
the Company and the corporation surviving such merger or acquisition.
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(c) This Agreement embodies the entire agreement and understanding between
the Company and WIG and supersedes any and all negotiations, prior
discussions and preliminary and prior agreements and understandings
related to the subject matter hereof, and may be modified only by a
written instrument duly executed by each party.
(d) This Agreement has been duly authorized, executed and delivered by and
on behalf of the Company and WIG.
(e) This Agreement shall be construed and interpreted in accordance with
the laws of the State of Washington, without giving effect to its
conflict of laws provisions.
(f) There is no relationship of partnership, agency, employment, franchise
or joint venture between the parties. Neither party has the authority
to bind the other or incur any obligation on its behalf.
(g) The Company hereby acknowledges that WIG is not a fiduciary of the
Company and that WIG makes no representations or warranties regarding
Company's ability to consummate a transaction with Target or to secure
financing, whether now or in the future.
(h) This Agreement and the rights hereunder may not be assigned by either
party (except by operation of law) and shall be binding upon and inure
to the benefit of the parties and their respective permitted
successors, assigns and legal representatives.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date hereof.
ISONICS CORPORATION
By: /s/ Xxxxx Xxxxxxxxx
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Name: Xxxxx Xxxxxxxxx
Title: President
XXXXX INVESTMENT GROUP
By: /s/ Xxxxx X. Xxxxx
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Name: Xxxxx X. Xxxxx
Title: President
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ANNEX A
INDEMNIFICATION
Recognizing that transactions of the type contemplated in this engagement
sometimes result in litigation and that Xxxxx Investment Group's ("WIG") role is
advisory, (the "Company") agrees to indemnify and hold harmless WIG, its
affiliates and their respective officers, directors, employees, agents and
controlling persons (collectively, the "Indemnified Parties"), from and against
any losses, claims, damages and liabilities, joint or several, related to or
arising in any manner out of any transaction, proposal or any other matter
(collectively, the "Matters") contemplated by the engagement of WIG hereunder,
and will promptly reimburse the Indemnified Parties for all expenses (including
reasonable fees and expenses of legal counsel) as incurred in connection with
the investigation of, preparation for, or defense of any pending or threatened
claim related to or arising in any manner out of any Matter contemplated by the
engagement of WIG hereunder, or any action or proceeding arising therefrom
(collectively, "Proceedings"), whether or not such Indemnified Party is a formal
party to any such Proceeding. Notwithstanding the foregoing, the Company shall
not be liable in respect of any losses, claims, damages, liabilities or expenses
that a court of competent jurisdiction shall have determined by final judgment
resulted from the gross negligence or willful misconduct of an Indemnified
Party. The Company further agrees that it will not, without the prior written
consent of WIG, settle compromise or consent to the entry of any judgment in any
pending or threatened Proceeding in respect of which indemnification may be
sought hereunder (whether or not WIG or any Indemnified Party is an actual or
potential party to such Proceeding), unless such settlement, compromise or
consent includes an unconditional release of WIG and each other Indemnified
Party hereunder from all liability arising out of such Proceeding.
The Company agrees that if any indemnification or reimbursement sought
pursuant to this letter were for any reason not to be available to any
Indemnified Party or insufficient to hold it harmless as and to the extent
contemplated by this letter, then the Company shall contribute to the amount
paid or payable by such Indemnified Party in respect of losses, claims,
damages and liabilities in such proportion as is appropriate to reflect the
relative benefits to the Company and its stockholders on the one hand, and
WIG on the other, in connection with the Matters to which such
indemnification or reimbursement relates or, if such allocation is not
permitted by applicable law, not only such relative benefits but also the
relative faults of such parties as well as any other equitable
considerations. It is hereby agreed that the relative benefits to the Company
and/or its stockholders and to WIG with respect to WIG's engagement shall be
deemed to be in the same proportion as (i) the total value paid or received
or to be paid or received by the Company and/or its stockholders pursuant to
the Matters (whether or not consummated) for which WIG is engaged to render
services bears to (ii) the fees paid to WIG in connection with such
engagement. In no event shall the Indemnified Parties contribute or otherwise
be liable for an amount in excess of the aggregate amount of fees actually
received by WIG pursuant to such engagement (excluding amounts received by
WIG as reimbursement of the expenses).
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The Company further agrees that no Indemnified Party shall have any
liability (whether direct or indirect, in contract or tort or otherwise) to the
Company for or in connection with WIG's engagement hereunder except for losses,
claims, damages, liabilities or expenses that a court of competent jurisdiction
shall have determined by final judgment resulted solely from the gross
negligence or willful misconduct of such Indemnified Party. The indemnity,
reimbursement and contribution obligations of the Company shall be in addition
to any liability which the Company may otherwise have and shall be binding upon
and inure to the benefit of any successors, assigns, heirs and personal
representatives of the Company or an Indemnified Party.
The indemnity, reimbursement and contribution provisions set forth herein
shall remain operative and in full force and effect regardless of (i) any
withdrawal, termination or consummation of or failure to initiate or consummate
any Matter referred to herein, (ii) any investigation made by or on behalf of
any party hereto or any person controlling (within the meaning of Section 15 of
the Securities Act of 1933 as amended, or Section 20 of the Securities Exchange
Act of 1934, as amended) any party hereto, (iii) any termination or the
completion or expiration of this letter of WIG's engagement and (iv) whether or
not WIG shall, or shall not be called upon to, render any formal or informal
advice in the course of such engagement.
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