Mr. Dan O’Brien Flexible Solutions International Victoria, BC V8T 5G4 April 1, 2007 Dear Dan,
Exhibit
10.9
Mr.
▇▇▇
▇’▇▇▇▇▇
Flexible
Solutions International
▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇ ▇▇▇
April
1,
2007
Dear
▇▇▇,
This
letter agreement (“Agreement”)
will
confirm that Flexible Solutions International. (together with its subsidiaries
and affiliates, “Client”)
hereby
retains Barretto Securities Inc. (“Barretto”) to provide non-exclusive financial
advisory and investment banking services to Client in connection with Client’s
intended “Transaction” (as hereinafter defined), in accordance with the terms
and conditions specified herein. This letter agreement is effective November
1,
2006. As used herein, the term “Transaction”
shall
mean any transaction or event or series or combination thereof whereby, directly
or indirectly, Client effects the private sale of its equity securities or
of
any securities or instruments convertible, in whole or in part, directly or
indirectly, into Client’s equity securities (collectively, “Securities”)
for a
consideration of $5,500.000 or a lesser amount that is acceptable to Client
in
its sole discretion, on terms and conditions that are acceptable to Client
in
its sole discretion.
1. General.
Pursuant to this Agreement, Barretto shall render the following services, as
reasonably requested by Client and appropriate for the Transaction:
1.1. use
its
best efforts to privately place Client’s Securities,
1.2. advise
Client as to the form and structure of the Transaction,
1.3. assist
in
the preparation of confidential private placement materials (“Materials”)
that
will be provided to prospective investors. The Materials may include: an
Executive Summary, a Private Placement Memorandum, a Term Sheet, a Subscription
Agreement, and/or a Power Point presentation, or may be limited to documents
and
information currently on file with the Securities and Exchange Commission.
Responsibility for the accuracy and contents of the Materials shall be solely
that of Client, and the Materials shall not be made available or used in
discussions until both the Materials, and its use, have been approved by
Client,
1.4. evaluate
various potential Transactions,
1.5. assist
Client in coordinating due diligence and related activities relating to
potential Transactions,
1.6. assist
Client, in concert with Client’s lawyers, accountants and executives in
negotiating the financial terms and structure of a Transaction,
1
1.7. assist
the management of Client in making appropriate presentations to the Board of
Directors of Client concerning the financial aspects of potential Transactions,
and
1.8. assist
in
the preparation of the definitive documentation for the
Transaction.
Client
acknowledges that Barretto does not and cannot make any guarantee that the
Transaction will be consummated, and that Client will have no claim against
Barretto as a result of the Transaction not being consummated.
Barretto’s
services under this Agreement do not include preparation for or rendering of
testimony or opinions in formal regulatory proceedings, preparation for or
rendering of testimony in litigation where Barretto is not a party, preparation
for or rendering of any valuation, appraisal or “fairness” opinion, or advising
or assisting Client in a matter other than a Transaction. If Client should
request Barretto to provide additional services not otherwise contemplated
by
this Agreement, Client and Barretto will enter into an additional agreement
which will set forth the nature and scope of the services, appropriate
compensation and other customary matters, as mutually agreed upon by Client
and
Barretto.
In
order
to coordinate the efforts in connection with a Transaction, during the term
of
Barretto’s engagement neither Client nor its management will conduct discussions
with any third party regarding a potential Transaction without the assistance
of
Barretto, and Client and Barretto will promptly disclose to and consult with
each other with respect to inquiries or expressions of interest received from
third parties in connection with a potential Transaction. N/A
Client
may, in its discretion, postpone, modify or abandon the proposed Transaction
prior to the closing and Client may refuse to discuss or negotiate an investment
in Client by any party for any reason whatsoever and may terminate negotiations
with any party at any time.
2. Compensation.
Client
hereby agrees to retain Barretto for the purposes specified above. The fees
for
such services shall be payable by Client as described in Exhibit
A
attached
hereto and hereby made a part hereof.
3. Right
of First Refusal.
Client
hereby grants Barretto the first right to exclusively perform the following
“Future Services” (as hereinafter defined) on behalf of Client (the
“Right
of First Refusal”):
the
Right of First Refusal will apply to all Future Services sought by Client before
the first to occur of the following: (i) Client terminates this Agreement for
“Cause” (as hereinafter defined), or without Cause; or (ii) Client does not
close a Transaction within one (1) year of the date hereof. For purposes of
this
Agreement, “Future
Services”
shall
mean any investment banking or investment advisory services sought by Client
in
connection with the private placement of Client’s Securities. The termination of
the Right of First Refusal shall not affect Barretto’s right to perform all
Future Services which Client sought before such termination. N/A
4. Term
and Termination
4.1 Term.
The
initial term of this Agreement shall commence on the date this Agreement is
executed by Client and shall continue until the close of business on June 29,
2006 and be extended upon mutual consent of the parties.
2
4.2 Termination.
Notwithstanding the foregoing (a) either party may terminate this Agreement
at
any time, for “Cause” (as hereinafter defined), effective at the time specified
in the notice of termination, (b) Client may terminate this Agreement at any
time, without Cause, effective as of the end of the then-current term, and
(c)
Barretto may terminate this Agreement at any time, effective at the time
specified in the notice of termination, if, in its sole discretion, a change
has
occurred in Client’s financial condition, results of operations, properties,
business or prospects, or in the composition of Client’s management or Board of
Directors which, in Barretto’s determination, reasonably made, has materially
adversely affected the marketability of Client or its Securities or the
likelihood of completing a Transaction. From and after the date of termination,
Barretto shall render no additional service to Client hereunder, except as
may
be otherwise agreed by Barretto and Client. For purposes hereof, “Cause”
shall
mean the failure of either party to perform one or more of its material
obligations hereunder, if such failure has not been cured within sixty (60)
days
of receiving the other party’s written notice describing the failure in detail.
Upon any termination of this Agreement, the services of Barretto will be
terminated without liability or continuing obligation to Client.
4.3 Effects
of Termination.
Upon
the termination of this Agreement, certain portions of this Agreement shall
continue in full force and effect, regardless of such termination, as
follows:
4.3.1 Upon
termination by Client without Cause, or upon termination by Barretto pursuant
to
subparagraph 4.2(c), above, or upon termination by Barretto for
Cause:
(i)
the
obligations of Client with respect to any reimbursable expenses incurred by
Barretto to be paid by Client to Barretto pursuant to this Agreement (including
pursuant to Exhibits
A and B
hereto)
or any related agreement subsequently entered into; N/A
(ii)
the
obligations of Client and Barretto with respect to this paragraph 4,
indemnification and contribution (paragraph 5 and Exhibit
B),
confidentiality and accuracy of information provided (paragraph 7), waiver
of
right to jury trial (paragraph 14.5), potential conflicts (paragraph 9) and
limitations on duties and third party rights (paragraph 13);
(iii)
Client shall pay Barretto a Termination Fee of One Hundred Thousand Dollars
($100,000), payable in full by Client on the effective date of the termination;
and N/A
(iv)
Client shall pay Barretto the Placement Fee described in Exhibit
A
in the
event Client enters into a definitive agreement with respect to any Transaction
at any time prior to the date twelve (12) months following the date of
termination with a “Prospective Investor” (as hereinafter defined). For purposes
hereof, “Prospective
Investor”
shall
mean a person or entity (X) introduced during the term of the Agreement by
Barretto to Client, or (Y) as to which Barretto provided advice regarding the
Transaction during the term of the Agreement, or (Z) who was, or should have
been, disclosed by Client to Barretto pursuant to the terms of this Agreement.
All Prospective Investors shall be included on a Prospective Investor list
maintained by Barretto during the term of this Agreement. The Prospective
Investor list shall be disclosed to Client from time to time, upon
request.
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4.3.2 Upon
termination by Client for Cause:
(i)
the
obligations of Client with respect to any reimbursable expenses incurred by
Barretto to be paid by Client to Barretto pursuant to this Agreement (including
pursuant to Exhibits
A and B
hereto)
or any related agreement subsequently entered into; and
(ii)
the
obligations of Client and Barretto with respect to this paragraph 4 and with
respect to indemnification and contribution (paragraph 5 and Exhibit
B),
confidentiality and accuracy of information provided (paragraph 7), waiver
of
right to jury trial (paragraph 14.5), potential conflicts (paragraph 9) and
limitations on duties and third party rights (paragraph 13).
5. Indemnity.
In
partial consideration for the agreement of Barretto to furnish services, Client
agrees to indemnify Barretto in accordance with the provisions set forth in
Exhibit
B
attached
hereto and hereby made a part hereof, all of which provisions are an integral
part of this Agreement and shall survive any termination of this Agreement.
6.
Representations
and Warranties of Client.
Client
represents, warrants and agrees that:
(a)
The
Securities will be offered and sold in reliance upon an exemption from the
registration requirements of Section 5 of the Securities Act of 1933, as
amended, and in compliance with all other securities laws applicable to the
Transaction;
(b)
The
Materials will not contain, and during the course of the Transaction Client
will
not make, any untrue statement of any material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading;
(c)
It
acknowledges that Barretto deems its relationships with its sources, resources
and contacts to be highly proprietary and sensitive since they are often the
result of years of relationship-building, and agrees not to divulge them to
any
third-party without Barretto’s consent, and to make use of them only in
connection with the purpose and terms of this Agreement;
(d)
Any
compensation payable to any third parties unrelated to Barretto will not reduce
or otherwise affect the compensation payable to Barretto, and Client is not
and
will not become obligated under any other agreement in a way which conflicts
with this one, and that Client will take no action which can result in the
loss
of any rights Barretto has under this Agreement; and
(e)
It
will maintain accurate records of all persons and entities (including, without
limit, officers, directors and stockholders of Client) with whom it has contact
after the date of this Agreement who may be participants in a Transaction or
who
may be resources for identifying participants in a Transaction, and it will
disclose to Barretto the names of such persons and entities promptly upon any
such contact. N/A
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7. Use
of
Information and Confidentiality.
Any
advice, written or oral, rendered by Barretto pursuant to this Agreement is
provided by Barretto solely for the confidential use by the Board of Directors
and senior management of Client and, except as required by law, may not be
disclosed publicly without Barretto’s prior written consent or used for any
purposes not related to Client’s participation in a Transaction or reproduced,
disseminated, quoted or referred to at any time, in any manner or for any
purpose; nor shall any public or other references to Barretto (or to such
opinions or advice) be made without the express prior written consent of
Barretto, which consent shall not be unreasonably withheld. Client agrees that
Barretto has the right to place advertisements in financial and other
newspapers, subject to Client’s right to review and change such advertisements,
which right shall be exercised reasonably.
Client
will furnish to Barretto such information as is reasonably appropriate to its
engagement hereunder. Client agrees and hereby represents that all information
furnished to Barretto by or on behalf of Client will be accurate and complete
in
all material respects at the time provided, and that if Client becomes aware
that any such information becomes inaccurate, incomplete or misleading during
the term of Barretto’s engagement hereunder, Client will promptly advise
Barretto and provide all necessary corrections. Client recognizes and confirms
that Barretto, in performing the services contemplated under this Agreement,
will be relying on information and data furnished by Client or third parties
who
may be involved in a potential Transaction without independent verification,
that Barretto will not assume responsibility for the accuracy or completeness
of
such information, and that Barretto will not make a physical inspection,
independent appraisal or valuation of any of the assets or liabilities of
Client, or of Client.
Barretto
agrees that the information it receives from Client that is designated as
nonpublic, confidential information, as well as any analyses, reports, notes
or
other documents or compilations containing any such nonpublic, confidential
information shall be distributed only to persons approved by Client, not to
be
unreasonably withheld or delayed, in connection with prospective Transactions,
and shall be furnished to such approved persons only in accordance with a
confidentiality and nondisclosure agreement approved by Client, which approval
shall not be unreasonably withheld or delayed. Barretto also agrees that the
nonpublic, confidential information furnished to it by Client pursuant to this
Agreement shall not be disclosed publicly, shall not be disclosed to any
unapproved person, and shall not be used for any purpose other than in
connection with the performance of Barretto’s services hereunder without
Client’s prior written consent, which may be granted or withheld in Client’s
sole discretion. The foregoing shall not apply to any information that is public
when provided or thereafter becomes public (other than by Barretto’s breach of
its confidentiality obligations to Client) or which is requested to be disclosed
by judicial or administrative process or otherwise by applicable law or
regulation. In connection with any judicial or administrative process or where
disclosure is compelled by applicable law or regulation, unless prohibited
by
law, Barretto shall promptly give Client prior notice thereof so that it may
seek a protective order or other appropriate remedies.
8. Exclusivity.
The
parties acknowledge and agree that Client has retained, or may in the future
retain, other financial advisors and/or investment bankers to perform financial
advisory and/or investment banking services similar to those performed by
Barretto with respect to matters other than the proposed Transaction and any
Future Services as to which Barretto has a Right of First Refusal. The
engagement by Client of such additional financial advisors and/or investment
bankers shall in no way affect the compensation arrangements provided for herein
with respect to the Transaction and any such Future Services and Barretto shall
be under no obligation whatsoever to any such additional financial advisors
and/or investment bankers.
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9. Limitation
on Advice.
It is
specifically understood that Client will not base its decisions regarding
whether and how to pursue a Transaction solely on Barretto’s advice, but will
also rely on the advice of Client’s legal, tax and other business advisors and
such other advisors and factors which Client considers appropriate.
10. Conflicts.
Client
acknowledges and agrees that Barretto is engaged in a broad range of activities
and services and does not and will not be working exclusively for Client in
the
industry which is the subject of this engagement, and agrees that it does not
now nor will Client in the future object to such non-exclusivity. Client
understands and agrees that in the ordinary course of Barretto’s business,
Barretto or its affiliates may at any time be providing or arranging financing
or providing other financial services to prospective investors, lenders or
other
entities or persons that may be involved in transactions similar to the
Transaction.
11. Notice.
Notice
given pursuant to any of the provisions of this Agreement shall be in writing
and shall be mailed, by certified or registered mail, sent by
nationally-recognized overnight delivery service or personally delivered to
Client and to Barretto at the following addresses, or such other addresses
as
the parties may designate from time to time:
If
to
Barretto:
▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇., Compliance Officer
Barretto
Securities Inc.
▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇.
▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
If
to
Client:
Mr.
▇▇▇
▇’▇▇▇▇▇
Flexible
Solutions International
▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇ ▇▇▇
Notice
shall be effective three (3) business days after mailing, one (1) business
day
after delivery to an overnight delivery service, or upon personal
delivery.
12. Counterparts.
This
Agreement may be executed simultaneously in two or more counterparts, each
of
which shall be deemed an original, but all of which constitute one and the
same
instrument.
6
13. No
Third Party Beneficiaries; No Fiduciary Duty.
This
Agreement has been and is made solely for the benefit of Client and Barretto,
and their respective successors and assigns, and no other person shall acquire
or have any right under or by virtue of this Agreement. It is acknowledged
and
agreed that Client’s engagement of Barretto hereunder is not intended to confer
rights upon any person not a party hereto (including stockholders, employees
or
creditors of Client) as against Barretto or its affiliates, or their directors,
officers, employees or agents. Barretto, as an independent contractor under
this
Agreement, shall not assume the responsibilities of a fiduciary to Client or
its
stockholders in connection with the performance of Barretto’s services
hereunder, and any duties of Barretto arising out of its engagement shall be
owed solely to Client.
14. Miscellaneous
14.1. This
Agreement (including all Exhibits hereto) incorporates the entire understanding
of the parties with respect to the subject matter of this Agreement, and may
not
be modified, amended or supplemented except by written agreement executed by
both parties hereto.
14.2. This
Agreement amends and supersedes all prior agreements of the parties with respect
to the subject matter herein, and in the event of any conflict or ambiguity
between the terms of any such prior agreement and this Agreement, the terms
of
this Agreement shall control.
14.3. This
Agreement and any related documents shall be governed by, and construed in
accordance with, the laws of the State of New York, without regard to the
principles of conflicts of law. Client and Barretto irrevocably and
unconditionally submit to the exclusive jurisdiction of any Federal or state
court sitting in the city of New York for the purpose of any suit, action or
other proceeding arising out of this Agreement. Client and Barretto hereby
agree
that sending any service of process, summons, notice or other document by US
registered or certified mail addressed to Client or Barretto as provided in
this
Agreement shall constitute effective service or delivery, as the case may be,
in
any action, suit or proceeding arising out of or relating to this Agreement.
14.4. If
any
term or provision of this Agreement or the application thereof to any person
or
circumstance shall to any extent be invalid or unenforceable, the remainder
of
this Agreement, or the application of such term or provision to persons or
circumstances other than those as to which it is invalid or unenforceable,
shall
not be affected thereby, and each term and provision of this Agreement shall
be
valid and be enforced as written to the fullest extent permitted by
law..
14.5. Client
and Barretto hereby waive any right they may have to a trial by jury in respect
of any claim brought by or on behalf of either party based upon, arising out
or
in connection with this Agreement.
14.6. If
suit
is brought to enforce this Agreement (including its Exhibits), the prevailing
party shall be entitled to recover its reasonable attorneys fees and costs,
as
well as court costs, in addition to any other amounts to which it may be
entitled.
15. Additional
Parties.
Client
agrees to cause any affiliate, including a newly formed affiliate, which may
become involved in a Transaction, and any successor, to execute appropriate
documentation binding it to the terms of this Agreement.
7
If
the
foregoing correctly sets forth our understanding, please indicate by initialing
each page, signing below and returning an executed copy to me.
Very
truly yours,
Barretto
Securities Inc.
By:_______________________________________________
▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, President
Agreed
and Accepted:
Flexible
Solutions International
By:
_________________________________________________
▇▇▇
▇’▇▇▇▇▇, President & CEO
Flexible
Agree with Barretto 5-25-07
8
Exhibit
A: Compensation
N/A
Retainer
Fee; Additional Expense Reimbursements.
A
non-refundable Retainer Fee of $______________ will be paid at the time Client
executes this Agreement. The Retainer Fee will compensate Barretto for certain
of its expenses to be incurred in connection with performing its duties under
this Agreement (including, without limit, travel, administrative, third-party
expenses, and fees and disbursements of third-party professional service
providers (collectively, “Expenses”))
regardless of whether a Transaction occurs. If Barretto’s Expenses exceed the
Retainer Fee, Barretto may, from time to time, invoice Client the entire amount
of such excess and Client will promptly reimburse Barretto for such amounts.
In
any event, upon completion of a Transaction or upon the earlier termination
of
the Agreement to which this Exhibit is annexed, Client will promptly pay any
and
all unreimbursed Expenses that Barretto has paid or accrued as of such date.
Placement
Fee. At
the
time of closing a Transaction, Client shall pay Barretto a fee payable in US
dollars (the “Placement
Fee”)
equal
to six percent (6%) of the “Aggregate Value” (as defined below) of the
Transaction and a warrant for shares equal to 6.5 % of the common shares issued
in the Transaction or to be issued upon the conversion of a preferred or debt
instrument into common shares. “Aggregate
Value”
shall
mean the total value of all consideration (including cash, securities, or other
property or assets of any kind) paid to or received by or to be paid to or
received by Client in connection with a Transaction initiated by Barretto
(including any series or combination of transactions).
If
any
portion of the Aggregate Value is payable in the form of securities, the value
of such securities, for purposes of calculating Barretto’s Placement Fee, will
be the average closing price for such securities for the 20 trading days prior
to the closing of the Transaction. In the case of securities that do not have
an
existing public market, the Placement Fee will be determined based on the fair
market value of such securities as mutually agreed upon in good faith by Client
and Barretto prior to the closing of the Transaction.
The
Placement Fee shall be paid in cash to Barretto simultaneously with the
realization of Aggregate Value at closing. Any portion of the Placement Fee
relating to amounts paid into escrow shall be payable, in full, upon the funding
of such escrow.
Method
of Payment.
[The
Retainer Fee N/A],
Placement Fee and [additional expense reimbursements N/A]
shall
be paid to Barretto by wire transfer of immediately available funds in
accordance with the following instructions, or such other written payment
instructions as Barretto may deliver to Client from time to time:
Barretto
Securities Inc.
HSBC
Bank
USA
Account
No: 773975985
ABA
No:
▇▇▇▇▇▇▇▇▇
Exhibit
B: Indemnification
Flexible
Solutions International agrees to indemnify and hold harmless Barretto and
its
affiliates and their respective directors, officers, employees, agents and
controlling persons (each such person, including Barretto, an “Indemnified
Party”)
from
and against any losses, claims, damages and liabilities, joint or several
(collectively, the “Damages”),
to
which such Indemnified Party may become subject in connection with or otherwise
relating to or arising from any transaction contemplated by the Agreement to
which this Exhibit is annexed or the engagement of or performance of services
by
an Indemnified Party thereunder (including, without limit, any claim relating
to
an untrue statement (or alleged untrue statement) in the Materials, or any
claim
relating to an omission (or alleged omission) in the Materials of a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading),
and
will reimburse each Indemnified Party for all fees and expenses (including
the
fees and expenses of counsel) (collectively, “Expenses”)
as
incurred in connection with investigating, preparing, pursuing or defending
or
assisting in the defense of any threatened or pending claim, action, suit,
proceeding or investigation (collectively, the “Proceedings”)
arising therefrom, whether or not such Indemnified Party is a formal party
to
such Proceeding and whether or not such Proceeding is initiated or brought
by
Client; provided,
that
Client will not be liable to any such Indemnified Party to the extent that
any
Damages are found in a final non-appealable judgment by a court of competent
jurisdiction to have resulted from the gross negligence, willful misconduct
or
intentional violation of law of the Indemnified Party seeking indemnification
hereunder. Client also agrees that no Indemnified Party will have any liability
(whether direct or indirect, in contract, tort or otherwise) to Client or any
of
its affiliates, security holders or creditors or any person asserting claims
on
behalf of Client arising out of or in connection with any transactions
contemplated by the Agreement or the engagement of or performance of services
by
any Indemnified Party thereunder except to the extent that any Damages are
found
in a final non-appealable judgment by a court of competent jurisdiction to
have
resulted from the gross negligence, willful misconduct or intentional violation
of law of the Indemnified Party. Client also agrees to reimburse each
Indemnified Party for all Expenses as they are incurred in connection with
enforcing such Indemnified Party’s rights under the Agreement (including,
without limitation, its rights under this Exhibit
B).
If
for
any reason other than as expressly provided above, the foregoing indemnity
is
unavailable to an Indemnified Party or insufficient to hold an Indemnified
Party
harmless, then Client will contribute to the amount paid or payable by an
Indemnified Party as a result of such Damages (including all Expenses incurred)
in such proportion as is appropriate to reflect the relative benefits to Client
on the one hand, and Barretto on the other hand, in connection with the matters
covered by the Agreement or, if the foregoing allocation is not permitted by
applicable law, not only such relative benefits but also the relative faults
of
such parties as well as any relevant equitable considerations. Client agrees
that for purposes of this paragraph the relative benefits to Client and Barretto
in connection with the matters covered by the Agreement will be deemed to be
in
the same proportion that the total value paid or received or to be paid or
received by Client in connection with the transactions contemplated by the
Agreement, whether or not
10
consummated,
bears to the fees paid to Barretto under the Agreement; provided,
that in
no event will the total contribution of all Indemnified Parties to all such
Damages exceed the amount of fees actually received and retained by Barretto
hereunder (excluding any amounts received by Barretto as a nonrefundable Expense
Advance or as additional reimbursement of Third Party Expenses).
Promptly
after receipt by the Indemnified Party of notice or commencement of Proceedings
in respect of which indemnity may be sought, the Indemnified Party will notify
Client in writing of the receipt or commencement thereof; provided,
that
the failure so to notify the Client will not relieve Client from any liability
which the Client may have on account of this indemnity or otherwise, except
to
the extent the Client will have suffered actual material prejudice as a result
of such failure. With respect to any such Proceeding brought by a third party,
Client will be entitled to assume the defense of such Proceeding with counsel
reasonably satisfactory to the Indemnified Party. Upon assumption by Client
of
the defense of any such Proceeding, the Indemnified Party will have the right
to
participate in such defense and employ separate counsel but Client will not
be
responsible for any fees and expenses of other counsel subsequently incurred
by
the Indemnified Party in connection with the defense thereof, unless (i) Client
has agreed to pay such fees and expenses, (ii) Client has failed to employ
counsel reasonably satisfactory to the Indemnified Party in a timely manner,
or
(iii) the Indemnified Party has been advised by its own counsel that there
exists actual or potential conflicting interests between Client and the
Indemnified Party, including the availability of one or more legal defenses
which are different from or in addition to those available to Client. In any
event, Client will not, in connection with any such Proceeding or separate
but
substantially similar or related Proceedings in the same jurisdiction arising
out of the same general allegations or circumstances, be liable for the fees
and
expenses of more than one separate firm of attorneys (in addition to local
counsel) for all the Indemnified Parties unless the defense of one Indemnified
Party is unique or separate from that of another Indemnified Party subject
to
the same claim or action.
Client
agrees not to enter into any waiver, release, settlement or compromise of any
Proceeding (whether or not Barretto or any other Indemnified Party is a formal
party to such Proceeding) in respect of which indemnification may be sought
hereunder without the prior written consent of Barretto, unless such waiver,
release, settlement or compromise includes an unconditional release of Barretto
and each Indemnified Party from all liability arising out or such
Proceeding.
Prior
to
entering into any agreement or arrangement with respect to, or effecting, any
proposed sale, exchange, dividend or other distribution or liquidation of all
or
a significant portion of its assets in one or a series of transactions or any
significant recapitalization or reclassification of its outstanding securities,
in any case where such agreement or arrangement fails to provide for the
assumption, directly or indirectly, of Client’s obligations under this
Exhibit
B,
Client
will notify Barretto in writing thereof (if not previously so notified) and,
if
requested by Barretto, shall arrange in connection therewith alternative means
of providing for the obligations of Client set forth in this Exhibit
B.
11
The
indemnity, reimbursement and contribution obligations of Client hereunder will
be in addition to any liability which Client may otherwise have to any
Indemnified Party and will be binding upon and inure to the benefit of any
successors, assigns, heirs and personal representatives of Client or any
Indemnified Party. The provisions of this Exhibit
B
will
survive the modification, termination or expiration of the Agreement or
completion of Barretto’s services thereunder.
Accepted
and Agreed
Flexible
Solutions International
By:
______________________________
▇▇▇
▇’▇▇▇▇▇, President & CEO
Flexible
Agree with Barretto 5-25-07
12
Warrant
to Purchase Common Stock
1. Introduction.
Agreement made May 4th
2007,
between Flexible Solutions International Inc., with offices at ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇., ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ (the “Company”), and Barretto
Securities
(Grantee”).
2. Grant
of Warrant.
The
Company grants to Grantee this warrant to purchase shares of the Company’s
common stock (the “Shares”) in the amounts, at the price, and subject to all the
terms and conditions set out in this agreement.
3. Grant
Date of Warrant.
The
grant date of this warrant is May
4th
2007.
4. Total
Number of Warrants Available.
The
total number of Shares that may be purchased by Grantee pursuant to this
Agreement is sixteen
thousand one hundred fifty four (16,154) shares,
as set forth in Paragraph 5.
5. Warrant
Price.
The
price at which Grantee may buy the Shares is four dollars fifty cents (US$4.50)
per Share.
6. When
Warrant Exercisable:
Grantee
may exercise the warrant rights at any time after the grant date but not later
than three years from the grant date.
7. Warrant
Not Transferable.
Grantee’s warrant rights may be exercised only by the Grantee or Grantee’s
personal representative during Grantee’s lifetime and are not transferable
except by will or by the laws of descent and distribution should Grantee die
intestate. The warrant rights may not be sold, assigned, pledged, or
hypothecated, and any attempt to do so shall be void. The warrant rights are
not
subject to levy, attachment, or other process of law, and any attempt to levy,
attach, or otherwise transfer the warrant rights or place liens upon them shall
be void.
8. Termination
of the Warrant.
Except
as otherwise provided herein, this Agreement shall expire May
3rd
2010,
three
years from the date of grant (the “Warrant Period”).
9. The
Company’s Merger, Reorganization, Etc.
If,
during the warrant period but before Grantee has exercised all of the warrant
rights with regard to the total number of Shares available for purchase by
Grantee, the Sharers of the Company’s common stock are changed into or exchanged
for a different number or different kind of shares or other securities, either
the Company’s or those of another company, this Agreement shall remain in force.
However, there shall be substituted for each of the Shares the number and kind
of shares or other securities for which each Share of the Company’s common stock
was exchanged or into which each Share was changed. The shares or securities
substituted for each Share of the Company’s common stock may be purchased by
Grantee under this Agreement for a price appropriately adjusted for the
substituted securities.
1
10. Declaration
of Stock Dividends.
If the
Company issues a common stock dividend on the Company’s common stock, the number
of Shares that may be purchased by Grantee thereafter shall be adjusted as
follows: To each of the un-purchased Shares, there shall be added the number
of
Shares issued as a dividend on each Share of outstanding common stock; each
of
the Shares together with the additional Shares applicable to that Share shall
be
bought as one unit for the price set out for each of the Shares in Paragraph
5.
11. Other
Changes in the Company’s Stock.
If there
area any changes in the number or kind of Shares outstanding that affect the
Company’s common stock or the stock or other securities into which the Company’s
common stock has been changed, other than those described in Paragraphs 10
and
11, a majority of the Company’s Board of Directors may make such changes in the
Shares available for purchase under this Agreement as the Board of Directors
deems appropriate. Any adjustment in the Shares available for purchase made
in
accordance with this Paragraph shall be binding upon Grantee.
12. The
Company’s Liquidation, Dissolution, Etc.
If the
Company liquidates or dissolves or enters into a merger or consolidation in
which the Company is not the surviving company, the Company shall give Grantee
at least one month’s notice prior to the liquidation, dissolution, merger, or
consolidation. Grantee shall have the right to exercise this Warrant in full,
to
the extent that is had not been previously exercised, within the one-month
period. To the extent that Grantee’s warrant rights have not been exercised on
the effective date of the liquidation, dissolution, merger, or consolidation,
they shall terminate.
13. Manner
in Which Warrant Is Exercised During Grantee’s
Lifetime.
Any of
Grantee’s warrant rights may be exercised by Grantee or Grantee’s personal
representative during Grantee’s lifetime by written notice addressed to the
Company’s corporate Secretary, signed by Grantee or Grantee’s personal
representative. The notice shall state the number of Shares to be purchased
and
shall be accompanied by a certified check payable to the Company for the
purchase price of Shares purchased. Immediately following payment of the check,
the Company shall issue a certificate or certificates for the Shares purchased
in Grantee’s or Grantee’s personal representative’s name and deliver it or them
to the person who signed the notice.
14. Manner
in Which Warrant Is Exercised After Grantee’s Death.
If
Grantee has not fully exercised the warrant rights before Grantee’s death, then
the persons designated by Grantee in writing on file with the Company or, if
no
such persons have been designated, Grantee’s executor or administrator, may
exercise any of Grantee’s warrant rights during the warrant period. The rights
shall be exercised in the same manner as provided in Paragraph 14 except that
the person entitled to exercise the rights shall be substituted for Grantee
or
Grantee’s personal representative.
15. Cashless
Exercise.
The
Warrant Holder may choose cashless exercise. The Holder must notify the Company
in an Exercise Notice of its election to utilize cashless exercise, in which
event the Company shall issue to the Holder the number of Warrant Shares
determined as follows:
X
= Y
[(A-B)/A]
Where:
X
= the number of Warrant Shares to be issued to the Holder.
2
Y
= the
number of Warrant Shares with respect to which this Warrant is being
exercised.
A
= the
average of the closing prices for the five Trading Days immediately prior to
(but not including) the Exercise Date.
B
= the
Exercise Price.
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For
purposes of Rule 144 promulgated under the Securities Act, it is
intended,
understood and acknowledged that the Warrant Shares issued in a cashless
exercise transaction shall be deemed to have been acquired by the
Holder,
and the holding period for the Warrant Shares shall be deemed to
have
commenced, on the date this Warrant was originally
issued.
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16. Violation
of Law.
The
warrant granted by this Agreement may not be exercised if its exercise would
violate any applicable state securities law, any registration under or any
requirements of the Securities Act of 1933, as amended, the Securities Exchange
Act of 1934, as amended, the rules of an exchange on which the Shares are
traded, any other federal law, or any law of applicable state securities
laws.
17. Unregistered
Stock.
If a
registration statement for the Shares is not in effect or if Grantee’s attorneys
require a writing from Grantee to avoid violation of the Securities Act of
1933,
as amended, the Company may require a written commitment form the person
exercising the warrant before delivery of the certificate or certificates for
the Shares. The Commitment shall be in a form prescribed by the Company. It
will
state that it is the intent of the person exercising the warrant to acquire
the
Shares for investment only and not the intent of transferring or reselling
them;
that the person exercising the warrant has been told that the Shares may be
“restricted shares” pursuant to Rule 144 of the Securities and Exchange
Commission and that any resale, transfer, or other distribution of the Shares
may only be made on conformity with Rule 144, the Securities Act of 1933, as
amended, or any other federal statute, rule or regulation. The Company may
place
a legend on the face of the certificate or certificates in accordance with
this
Commitment and may refuse to permit transfer of the Shares unless it receives
satisfactory evidence that the transfer will not violate Rule 144, the
Securities Act of 1933, as amended, or any other federal statute, rule, or
regulation.
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▇▇▇
▇’▇▇▇▇▇, CEO
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Flexible
Warrant to Purch with Barretto 5-24-07
3