CONSULTING AGREEMENT
This Agreement is made as of the 7th day of July, 2005 by and between
Ovation Products Corporation, a Delaware corporation having its principal place
of business at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the
"Company"), and Alexandros Partners LLC, a Delaware limited liability company
having its principal place of business at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Consultant").
The principals of the Consultant have substantial experience in
financial management and financing matters; and
The Company desires to retain the services of the Consultant to advise
the Company with respect to a proposed capital financing to be initiated by the
Company and to provide other financial management services.
The parties, intending to be legally bound, do hereby agree as follows:
1. Consulting Services
a) The Company hereby agrees to engage the Consultant, and the Consultant hereby
accepts such engagement, to advise the Company with respect to the terms,
structure and timing of a proposed capital financing (each a "Financing"), which
may take the form of a private placement of the Company's equity or debt
securities, a bridge financing, a public offering of the Company's securities
whether effected directly through an initial public offering or indirectly
through a merger with a publicly held company, a merger, consolidation,
reorganization or other business combination pursuant to which the business of
the Company is combined with that of another party, the acquisition, directly or
indirectly, by another party of more than 50% of the capital stock or assets of
the Company by way of a negotiated purchase or otherwise, or the acquisition,
directly or indirectly, by the Company of more than 50% of the capital stock or
assets of another party by way of a negotiated purchase or otherwise, and to
identify for or to introduce the Company to potential investors in or parties to
the Financing and to provide such additional assistance to the Company with
respect to financial management issues related to the Financing as the Company
may request.
b) The consulting services to be provided by the Consultant will be performed
exclusively by the principals of the Consultant. The Company acknowledges that
(i) the Consultant is not a registered broker or dealer under federal or state
law and is not a member of the National Association of Securities Dealers, and
(ii) the Consultant will not be acting as a placement agent for the Company or
as a broker or dealer in connection with any Financing or Transaction.
c) The Company retains the right to pursue fundraising activities on its own.
2. Term
The consulting engagement shall commence on the date first set forth
above (the "Commencement Date"), and shall continue until the completion of the
Financing but no later than July 7, 2006. The Company will have the right to
terminate this Agreement at any time and for any reason prior to July 7, 2006 by
written notice to the Consultant, but such termination will not affect the
Consultant's right to receive the Consulting Fees set forth in Section 5 of this
Agreement upon the closing of a qualified Financing.
3. Position and Duties; Location
The principals of the Consultant shall perform the consulting duties at
such location or locations as the Consultant shall choose, except that the
Company shall have the right from time to time, upon reasonable notice, to
require one or more of the principals of the Consultant to attend meetings at
locations designated by the Company.
Ovation Products Consulting Agreement - 2005 Confidential
1
4. Performance
The Consultant shall perform the consulting services in a competent and
skillful manner. The Consultant shall comply with all reasonable rules,
procedures and standards adopted from time to time by the Company. Nothing in
this Agreement shall prevent the Consultant from undertaking other consulting
engagements during the term of this Agreement so long as such services do not
conflict with the timely and competent performance of the Consultant's duties
under this Agreement.
5. Consulting Fee
In full consideration of the services to be provided by the Consultant,
the Company will pay the following compensation to the Consultant:
a) At the execution of this Agreement a consulting fee in the amount of
$25,000.
b) If the Financing takes the form of a sale of equity or debt securities,
a cash payment to be made no later than five days after the closing equal to
five percent (5%) of the gross proceeds to the Company from any investor first
introduced to the Company by the Consultant.
c) If the Financing takes the form of a sale of equity or convertible debt
securities, Consultant will also receive Warrants to purchase shares of the
capital stock of the Company issued in the Financing or into which any
convertible debt securities are convertible. The number of warrants to be issued
shall equal five percent (5%) of the number of shares of the Company's capital
stock purchased, or the number of shares into which convertible debt securities
are convertible, by investors first introduced by the Consultant. The exercise
price of such warrants shall equal the per share purchase price paid by the
investors for such capital stock or the conversion price of any convertible debt
securities. If more than one closing occurs, the exercise price of such warrants
shall equal the weighted average per share conversion price for all such capital
stock. If the Company issues any warrants to investors first introduced by the
Consultant in connection with any Financings, the warrants issued to the
Consultant shall contain the same terms as the warrants issued to those
investors. If no warrants are issued to investors introduced by the Consultant,
then the warrants issued to the Consultant shall provide for adjustment of the
exercise price to reflect any stock splits (whether in the form of stock
dividends or otherwise), capital reorganizations or reclassifications, or any
other similar transaction, and shall expire ten (10) years from the final
closing date. Furthermore, the warrants shall be exercisable by payment in full
in cash, or by so-called "cashless exercise" provisions enabling the Consultant
to pay the exercise price by reducing the number of shares to be issued upon
exercise of the warrants.
d) No later than thirty (30) days after closing of one or more Financings
that raise cumulatively more than $500,000 for the Company, at the Consultant's
option, either: (i) $50,000 in cash, or (ii) that number of shares of the
Company's Common Stock (the "Common Stock"), par value $.01 per share, as shall
be determined by dividing $50,000 by the purchase price per share of capital
stock issued by the Company in the Financing. The $500,000 includes funds raised
from whatever source, after August 1, 2005, until the expiration of this
Agreement. In addition, the Company will issue to the Consultant, no later than
thirty (30) days after the closing of the Financing that results in the Company
having raised, on a cumulative basis at least $500,000 from whatever source,
after August 1, 2005, a stock purchase warrant granting to the Consultant the
right to purchase 50,000 shares of Common Stock. The exercise price of such
warrants shall equal the per share purchase price paid by the investors for such
capital stock. The warrants shall provide for adjustment of the exercise price
to reflect any stock splits (whether in the form of stock dividends or
otherwise), capital reorganizations or reclassifications or any other similar
transaction and shall expire seven (7) years from the final closing date.
Furthermore, the warrants shall be exercisable by payment in full in cash, or by
so-called "cashless exercise" provisions enabling the Consultant to pay the
exercise price by reducing the number of shares to be issued upon exercise of
the warrants.
Ovation Products Consulting Agreement - 2005 Confidential
2
e) If the Financing takes the form of a merger, consolidation,
reorganization or other business combination pursuant to which the business of
the Company is combined with that of another party, the acquisition, directly or
indirectly, by another party of more than 50% of the capital stock or assets of
the Company by way of a negotiated purchase or otherwise, or the acquisition,
directly or indirectly, by the Company of more than 50% of the capital stock or
assets of another party by way of a negotiated purchase or otherwise, and the
other party to the Financing was first introduced to the Company by the
Consultant, then the parties will negotiate in good faith with respect to the
consulting fee to be paid the Consultant as the result of such Financing. Should
the parties be unable to agree on the amount of such consulting fee, then the
parties will submit the dispute to arbitration as provided below.
(f) If, during the twelve (12) month period following the termination or
expiration of this Agreement, the Company or any of its affiliates raises
capital in a private or public offering of its debt or equity securities from
any party or parties first introduced to the Company by the Consultant, the
Company will pay the Consultant the compensation that would otherwise be payable
under this Agreement with respect to such transaction.
6. Reimbursement of Expenses
The Company shall reimburse the Consultant for all normal and reasonable
business expenses incurred by the Consultant in the performance of its duties,
whether or not the Company successfully completes a financing, provided however,
that such expenses are approved in advance by the Company. The Consultant will
not incur any out of pocket expenses in excess of $1,000 for any single expense
item, or $2,500 in the aggregate, without the prior approval of the Company.
7. Confidential Information
7.1 The Consultant acknowledges that its relationship with the Company is
one of high trust and confidence by reason of its access to the trade secrets
and confidential and proprietary information of the Company. The Consultant
shall not, and shall take all reasonable commercial steps to ensure that its
principals and employees will not, at any time, either during its engagement by
the Company or thereafter, disclose to others, or use for its own benefit or for
the benefit of others, any confidential, proprietary or secret information
owned, possessed or used by the Company (collectively, "Confidential
Information"). By way of illustration, but not limitation, Confidential
Information includes trade secrets, technical information, product designs,
inventions, data, marketing plans, forecasts, unpublished financial information,
budgets, licenses, prices, costs, and employee, customer and supplier lists and
information.
7.2 The undertakings and obligations of the Consultant under this Section
7 shall not apply, however, to any Confidential Information which (i) is or
becomes generally known to the public through no unauthorized action on the part
of the Consultant or its principals or employees, (ii) is generally disclosed to
third parties by the Company without restriction on such third parties, or (iii)
is approved for release by the Company.
7.3 The Consultant acknowledges that the disclosure of any Confidential
Information may give rise to irreparable injury to the Company and that money
damages would be an inadequate remedy for any such breach. Accordingly, the
Company may seek and obtain injunctive relief against the breach or threatened
breach of this Agreement, in addition to any other legal or equitable remedies
which may be available. The Consultant acknowledges that the covenants and
agreements set forth in this Agreement are necessary for the protection of the
legitimate business interests of the Company and are reasonable in scope and
content.
7.4 Upon the termination of this Agreement, the Consultant shall return to
the Company all Confidential Information in its possession or under its control.
Ovation Products Consulting Agreement - 2005 Confidential
3
8. Independent Contractor
The Consultant will furnish its services as an independent contractor and
not as an agent or legal representative of the Company. Neither the Consultant,
nor any principal or employee of the Consultant, has any power or authority to
act for, represent or to bind the Company in any manner.
9. No Warranty
The Company acknowledges that the Consultant has made no representations
or warranties to the Company with respect to the outcome, timing or results of
the Financing.
10. Dispute Resolution
Any disputes, contentions, controversies or claims arising in connection
with this Agreement between the parties shall, if possible, be settled in an
amicable way. If, however, no understanding is reached, such disputes,
contentions, controversies and claims shall be exclusively and finally settled
by binding arbitration using a neutral arbitrator. The arbitration shall be
conducted utilizing the Expedited Procedures under the Commercial Arbitration
Rules of the American Arbitration Association then in effect. The arbitration
will be conducted in Boston, Massachusetts. The Company and the Consultant shall
each share and pay equally the fees and costs of the arbitrator and the
arbitration. The decision by the arbitrator shall be binding and conclusive upon
the parties and their respective successors, assigns and trustees, and they
shall comply with such decision in good faith, and each party hereby submits
itself to the jurisdiction of the federal or state courts of the Commonwealth of
Massachusetts, but only for the entry of judgment or for the enforcement of the
decision of the arbitrator hereunder.
11. Miscellaneous
11.1 Modifications and Waivers
No change, modification or waiver of any provision of this Agreement shall
be valid or binding unless it is in writing and signed by the parties intended
to be bound. No waiver of any breach, term or condition shall constitute a
subsequent waiver of the same or any other breach, term or condition.
11.2 Notices
All notices, requests, consents, approvals, agreements or other
communications required or permitted to be given under this Agreement shall be
in writing and shall be delivered by hand or sent by facsimile transmission or
email with subsequent written confirmation, or by registered or certified mail
(postage prepaid, return receipt requested), or by recognized overnight courier,
addressed to the respective addresses of the parties first set forth above or to
such other address as either party shall designate for itself by notice to the
other party given as provided above. Any such notice or other communication
shall be deemed to have been given or made upon delivery, if delivered
personally or by facsimile or email transmission during business hours, three
business days after mailing, if mailed, or one business day after delivery to an
overnight courier, if delivered by overnight courier service.
11.3 Governing Law; Consent to Jurisdiction
This Agreement shall be governed by and construed exclusively in
accordance with the laws of the Commonwealth of Massachusetts without regard to
choice of law principles.
11.4 Assignment
This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors, heirs, legatees and permitted
assigns, including any public company into which the Company is merged as
contemplated by Section 1 of this Agreement. Except as the result of a merger of
the Company into a public company, this Agreement is not assignable except with
the prior written consent of the other party.
Ovation Products Consulting Agreement - 2005 Confidential
4
11.5 Entire Agreement
This Agreement shall constitute the entire agreement between the parties
with respect to the subject matter hereof superseding all prior agreements.
11.6 Severability
The parties have carefully considered the covenants and agreements
contained in this Agreement and hereby stipulate that such covenants and
agreements are fair and reasonable in light of all the facts and circumstances
of the relationship between the parties; however, in the event a court or
tribunal shall decline to enforce any of the covenants set forth in this
Agreement, such covenants shall be deemed modified to the extent that the court
shall find enforceable. If any provision of this Agreement is found to be
invalid by any court or tribunal, the invalidity of such provision shall not
affect the validity of the remaining provisions of this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the date set forth at the beginning of this Agreement.
Confirmed and Agreed to:
OVATION PRODUCTS CORPORATION ALEXANDROS PARTNERS LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------- --------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: CEO Title: President
Ovation Products Consulting Agreement - 2005 Confidential
5