Mr. Donald J. Stewart
Vice President of Finance,
Chief Financial Officer
Abaxis, Inc.
1320 Chesapeake Terrace
Sunnyvale, CA 94089
1. This letter agreement will confirm the understanding between Abaxis, Inc. and/or its affiliates and successors (the "Company" or "ABAX") and RCG Capital Markets Group, Inc. and/or its affiliates and successors ("RCG") with respect to the matters set forth herein. RCG will provide consulting and other services, as more particularly described herein and in the attachment hereto entitled Financial Relations Services Attachment (the "Financial Relations Services"), to the Company and will represent the Company during the engagement as non-exclusive Financial Relations Consultants with respect to the Financial Relations Services, on the terms and conditions set forth herein and in the attachments hereto, all of which are incorporated herein by reference and form a part hereof. The period during which RCG will perform the Financial Relations Services for the Company will commence on April 15, 2000 (the "Commencement Date") and, unless otherwise terminated as provided in this paragraph or in paragraph nine of this letter agreement, will terminate on the date which is Eighteenmonthsfollowing the commencement date (the "Termination Date"). The period beginning on the Commencement Date and ending on the Termination Date is hereafter referred to as the "Engagement Term". As more particularly described in paragraph 9 below, either party may terminate this agreement at any time after the initialSix month anniversary of the Commencement Date upon thirty (30) days prior written notice to the other party.
2. During the Engagement Term, the Company agrees to furnish or cause to be furnished to RCG all information concerning the Company as RCG reasonably requests and deems appropriate for purposes of providing the Financial Relations Services. The Company represents that all information, with respect to the Company, provided to RCG will be complete and correct in all material respects and will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein not misleading in light of the circumstances under which such statements are made. Abaxis understands, that in rendering the Financial Relations Services required hereunder, RCG will be using and relying on publicly available information and the information furnished to RCG by Abaxis without independent verification thereof. RCG will treat as confidential any non-public information provided to it hereunder and will not disclose the same to third parties at any time unless required by applicable law. In the event disclosure has been or will be made by RCG, RCG will use its reasonable best efforts to cooperate as requested by the Company in minimizing any potential loss or injury to the Company as a consequence of any such necessary disclosure. In addition, RCG will use its reasonable best efforts to comply with all applicable state and Federal securities laws in the performance of this agreement.
3. During the Engagement Term, RCG and its employees, consultants and contractors will be generally available to Abaxis, Inc., in connection with its rendering of the Financial Relations Services. Specifically, RCG (a) will assist the Company to identify and secure an underwriter for a future securities offering (b) will outline, develop and implement a financial relations program to assist the Company in creating and/or enhancing a positive and more visible public image, (c) may contact existing and future shareholders, broker/dealers, potential investors, registered representatives, institutions, mutual fund managers, investment banking sources, securities analysts, independent portfolio managers, and other professional investment community contacts including certain financial media sources for the purpose of enhancing the Company's public image and perceived value, (d) will assist the Company in the creation, production and distribution of certain financial markets and investor/shareholder corporate image materials, including corporate profiles, due diligence materials and investor packages, as well as all financial press releases; (e) assist the Company in its endeavor to secure research analyst coverage through a targeted securities professionals campaign and (f) otherwise perform the services described in the Financial Relations Services Attachment.
4. During the Engagement Term, the Company will afford RCG the opportunity and reasonable time period to review and/or comment on any disclosure, prior to its release, which the Company plans to make to any of the sources described in paragraph (3) and which relates to the Financial Relations Services to be provided hereunder. In addition, RCG will be responsible for assisting the Company in writing and/or editing, producing, coordinating and disseminating all financial industry press releases. RCG agrees that it will not release or distribute any press release without the Company's prior consent.
5. In consideration of RCG's services hereunder, the Company agrees to pay RCG, promptly when due, the Compensation as described by and in strict accordance with the attachment hereto entitled Financial Relations Compensation Attachment. Should RCG and the Company determine to extend the Engagement Term or change the scope of the engagement, then a mutually acceptable amendment or supplement to that attachment shall be promptly executed by RCG and Company. Absent any such amendment, all terms and conditions of this letter agreement shall be binding to the parties.
6. RCG shall be entitled to such additional fees as may be mutually agreed upon by separate agreement between the parties hereto, for additional consulting services not anticipated in this agreement rendered during the engagement term.
7. As more particularly set forth in the Financial Relations Compensation Attachment, the Company agrees to pay all of RCG's direct and certain indirect out-of-pocket expenses reasonably incurred, in connection with this engagement. As set forth in the Financial Relations Compensation Attachment, an expense retainer shall be utilized for this purpose.
8. The Company and RCG agree to indemnify each other (the indemnifying party hereafter being referred to as the "Indemnitor", and the party entitled to indemnification hereafter being referred to as the "Indemnitee") as follows: Indemnitor agrees to defend, indemnify and hold harmless Indemnitee, and its officers, directors, and employees against any and all losses, claims, demands, suits, actions, judgments, awards, damages, liabilities, costs, reasonable attorneys' fees, and expenses incurred in investigating, preparing or defending any such action or claim, directly or indirectly caused by, related to, or asserted by a third party, based upon or arising out of (a) the Indemnitor's breach of or the incorrectness of any of its representations, warranties, or covenants contained in this agreement; and/or (b) any Services rendered by RCG as defined in or contemplated by this agreement, as it may be amended from time to time (the "Agreement"). Notwithstanding the foregoing, the Indemnitor shall have no obligation to indemnify or hold the Indemnitee harmless with regard to Indemnitee's gross negligence, willful misconduct, or the material breach of or the incorrectness of any representation, warranty or covenant of Indemnitee contained in this Agreement.
9. Either party hereto may terminate this engagement as follows:
(a) Either party hereto may terminate this agreement at the conclusion of initial Six months from the execution date of the agreement by providing the other party a 30-day notification of "Intent to Terminate Agreement". Not withstanding the above, the Company may also terminate this Agreement at any time "without cause", upon providing RCG Thirty (30) days written notice. In the event of such termination by the Company, "without cause", RCG shall be entitled to receive Fifty (50%) percent of the remaining applicable period cash compensation to the extent it is unpaid, pro-rated from the notice date of termination, along with reimbursement of any non paid, out-of-pocket expenses up to the effective date of termination. Additionally, RCG will be entitled to receive all unexercised vested, and Fifty (50%) percent of non-vested warrants or stock options granted hereunder. Such payment is due and payable on the effective date of termination.
(b) WITH CAUSE: In addition, the Company may terminate this Agreement at any time upon written notice to RCG:
(i) If RCG fails to cure any material breach of any provision of this Agreement within Sixty (60) days from written notice from the Company (unless such breach cannot be reasonably cured within the Sixty (60) days and RCG is actively pursuing to cure said breach).
(ii) For RCG's substantial negligence, willful misconduct, fraud, misappropriation, embezzlement, or other dishonesty;
(iii) Upon a judicial ruling of RCG's failure to have materially complied with applicable law or regulation relating to the Services it will perform and such action had an adverse, material and measurable negative impact on the Company;
(iv) Upon the filing by or against RCG of a petition to have RCG adjudged as bankrupt or a petition for reorganization or arrangement under any law relating to bankruptcy, and where any such involuntary petition is not dismissed within 90 days.
Upon termination under subparagraph (b) of this paragraph 9, the Company shall have no liability to RCG for Compensation accruing after such termination, and RCG shall have no further entitlement thereto. Upon such termination, RCG shall be entitled to receive and retain only accrued Compensation and vested Options to the date of such termination, to the extent it is unpaid, together with expenses not yet reimbursed.
(c) RCG may terminate this agreement at any time upon written notice to the Company.
(i) If the Company fails to cure any material breach of any provision of this Agreement with Sixty (60) days from written notice from the Company (unless such breach cannot be reasonably cured within the Sixty (60) days and the Company is actively pursuing to cure said breach);
(ii) For the Company's substantial negligence, willful misconduct, fraud or misrepresentation;
Such termination under 9(c)(i or ii) shall be deemed to be a termination by the Company "without cause" as provided in paragraph 9 (a) above.
(iii)Upon a judicial ruling of Company's failure to have materially complied with any applicable law or regulation relating to the Services being provided and such action had an adverse, material and measurable negative impact on RCG ;
(iv) Upon the filing by or against the Company of a petition to have the Company adjudged as bankrupt or a petition for reorganization or arrangement under any law relating to bankruptcy, and where any such involuntary petition is not dismissed within 90 days.
(d) RENEWAL. The Company agrees to notify RCG Thirty (30) days prior to the end of theEighteen month period of its intent to not renew. Should the Company fail to notify RCG, the contract will revert to a month-to-month agreement until specifically renewed in writing or terminated with the Thirty (30) day notice. Such renewal or month-to-month engagement shall be on the same terms and conditions contained herein, unless modified and agreed in writing by both parties.
10. RCG hereby fully discloses that certain associates, affiliates, officers and employees of RCG are:
(a) Licensed as Registered Securities Principals issued by the National Association of Securities Dealers ("NASD"); and/or
(b) Licensed as Registered Representatives issued by the NASD.
All NASD registrations are carried by SWS Financial Services, Inc., which is a non-RCG affiliated NASD-registered broker/dealer.
RCG further discloses and the Company specifically acknowledges that RCG is NOT a broker/dealer registered with the NASD or any other regulatory agency. Furthermore, in the performance of Services under the terms and conditions of this agreement, such services shall not be considered to be acting in any broker/dealer or underwriting capacity and therefore RCG is not receiving any compensation from the Company as such.
11. The Company understands and acknowledges that RCG provides other and similar consulting services to companies, which may or may not conduct business and activities similar to those of the Company. RCG is not required to devote its full time and attention to the performance of its duties detailed in this agreement, and may devote only so much of its time and attention as it deems reasonable or necessary.
12. As the services are being provided by an Arizona domiciled corporation, the validity and interpretation of this letter agreement shall be governed by the laws of the State of Arizona applicable to agreements made and to be fully performed therein.
13. In the event of any controversy or dispute arising out of, or relating to this Agreement or breach thereof, RCG and ABAX agree to settle such controversy by arbitration pursuant to Arizona Revised Statutes, 12-1501et seq. and in accordance with the rules, of the American Arbitration Association governing commercial transactions then existing, to the extent that such Rules are not inconsistent with said Statutes and this Agreement. Judgment upon the award rendered under arbitration may be entered in any court having jurisdiction. The cost of the arbitration procedure shall be borne by the losing party, or, if the decision is not clearly in favor of one party or the other, the costs shall be borne as determined by the arbitrator. The parties agree that the arbitration procedure provided herein shall be the sole and non-exclusive remedy to resolve any controversy or dispute arising hereunder, and that the proper venue for such arbitration proceeding shall be Maricopa County, Arizona.
14. For the convenience of the parties, any number of counterparts of this letter agreement may be executed by the parties hereto. Each such counterpart shall be deemed to be an original instrument, but all such counterparts taken together shall constitute one and the same letter agreement.
15. Miscellaneous:
If the foregoing correctly sets forth our agreement, please sign the enclosed copy of the letter in the space provided and return it to us, whereupon all parties will be bound to the terms of this engagement.
By the of execution of this agreement, RCG Capital Markets Group, Inc. and/or affiliates, (collectively "RCG") will serve as the non-exclusive Financial Relations Counsel for Abaxis, Inc. ("ABAX" or "Company"). Consistent with the Abaxis, Inc... Financial Relations Campaign Overview, RCG anticipates the following services will be attempted and/or implemented within the scope of this engagement:
RCG intends to perform the services and accomplish the specified goals within the scope of this engagement. However, due to the nature and type of services being performed, RCG cannot guarantee, nor can it be assumed that certain specific results will be realized with reference to increased market valuation of ABAX securities.
In consideration of the Financial Relations Services to be rendered pursuant heretoAbaxis, Inc. agrees to promptly pay RCG the following compensation (the "Compensation"):
RCG will obtain prior approval from the Company for all specific expense items and any single miscellaneous expense item in excess of $750. RCG acknowledges and understands that the Company will have specific amounts budgeted for these expenditures and will use it's best efforts to ensure those budget amounts are not exceeded.
In the event that ABAXis merged into or a controlling interest is acquired by any entity, or there is a material change in ABAX management, meaning a change in the CEO and the CFO, RCG will be immediately vested in all remaining options, including those, which to that point have not yet been vested.
