EXHIBIT 10.2
FINANCIAL CONSULTING AGREEMENT
THIS FINANCIAL CONSULTING AGREEMENT, made as of this 3rd day of April,
1996, is by and between CPI Aerostructures, Inc., a New York corporation (the
"Company"), with its principal place of business at 200 A Executive Drive,
Edgewood, New York 11717, and Barber & Bronson Incorporated, a Florida
corporation ("B&B"), having its principal place of business at 2101 West
Commercial Boulevard, Suite 1500, Fort Lauderdale, Florida 33309.
R E C I T A L S:
A. The Company is a public company with a class of equity securities
publicly traded, and desires to retain B&B to provide certain financial
consulting services.
B. B&B desires to provide certain financial consulting services to the
Company in accordance with the terms and conditions contained hereinafter.
NOW, THEREFORE, in consideration of the mutual promises set forth
herein, the parties hereto hereby agree as follows:
1. Consulting Services. During the term of this Agreement, B&B is
hereby retained by the Company to provide financial consulting services to the
Company, as said services relate to corporate finance matters. B&B shall provide
such financial consulting services as reasonably requested by the Company during
the term of this Agreement, provided that nothing hereunder shall require B&B to
devote a minimum number of hours per calendar month toward the performance of
services hereunder. Such services shall include, but not be limited to, advice
and assistance regarding mergers, acquisitions, consolidations, reorganizations,
recapitalization, business combinations or other transactions pursuant to which
the Company acquires, is acquired by, or combines with another entity. Unless
otherwise agreed to by B&B, all services hereunder shall be performed by B&B, in
its sole discretion, at its principal place of business or other offices.
Notwithstanding anything contained herein to the contrary, the services to be
performed by B&B hereunder may be performed by any employee or consultant to
B&B.
2. Term. The term of this Agreement shall be for two years commencing
as of the date first written above and terminating one day prior to the 2nd
anniversary hereof. Thereafter, this Agreement shall be renewed for subsequent
one year terms upon mutual agreement of the parties. Notwithstanding anything
contained herein to the contrary, this Agreement will terminate on December 31,
1996 in the event the private placement (the "Private Placement") contemplated
by the letter of intent dated March 5, 1996 between B&B and the Company has not
closed by such date.
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3. Compensation.
(a) In consideration for the performance of services
hereunder, the Company hereby agrees to pay B&B the aggregate sum of $3,000 per
month during the term of this Agreement. The initial monthly payment shall be
made as of the date hereof, and each subsequent monthly payment shall be due and
payable on each successive monthly anniversary of such date. The Company agrees
to pay on a pre-approval basis all out-of-pocket expenses incurred by B&B in
connection with such services to be rendered hereunder. B&B may, from time to
time, deem it to be in the best interests of the Company to retain an outside
consultant in connection with certain specific acquisitions or proposed
transactions. In such event, the Company agrees to pay any and all fees and
expenses of such consultant on a pre-approval basis.
(b) In addition, and in consideration of the payment of $100,
and for other good and valuable consideration, the receipt of which is hereby
acknowledged, the Company hereby grants B&B five (5) year warrants, which
warrants may be assigned to shareholders, directors, officers, employees or
partners of B&B or any successor, to purchase an aggregate 300,000 shares of the
Company's Common Stock, exercisable at $1.00 per share. The warrants shall be
immediately exercisable and shall be in substantially the form attached hereto
as Exhibit A, and incorporated herein by reference. Such warrants shall be
delivered to Broad and Cassel, counsel to B&B, 201 South Biscayne Boulevard,
Suite 3000, Miami, Florida 33131. The warrants shall be held in escrow by Broad
and Cassel pursuant to the terms of an escrow agreement between B&B, the Company
and Broad and Cassel entered into simultaneously with this Agreement and
attached hereto as Exhibit B.
At any time during the term of these warrants, the then
holders (the "Holders") of a majority of the warrants issued under this
Agreement, and/or the shares of Common Stock which were issued upon exercise
thereof, shall have the right upon written notice to the Company and on at least
two occasions to demand registration of the shares of Common Stock underlying
the warrants or the shares of Common Stock which previously were issued upon
exercise thereof (the "Demand Registration Rights"). Upon such notice, the
Company shall use its best efforts to prepare and file with the Securities and
Exchange Commission (the "SEC"), at the Company's sole cost and expense with
respect to the exercise of the first Demand Registration Rights, a registration
statement to permit the public sale of such shares of Common Stock. The Company
will use its best efforts to cause said registration statement to be declared
effective by the SEC as soon as possible and shall continue to use its best
efforts to cause such registration statement to be deemed current for at least
one hundred twenty (120) days after the effective date thereof. Notwithstanding
anything contained herein to the contrary, the Holders shall have the right to
demand registration of the afore-described shares on two separate occasions;
with each of such demand registration rights being deemed satisfied hereunder
when said registration statement relating thereto is declared effective by the
SEC, provided the other provisions hereunder are complied with by the Company.
In addition, if at any time commencing after the date hereof and
expiring five years thereafter, the Company proposes to register any of its
securities under the Securities Act of 1933, as amended (other than in
connection with a merger or pursuant to Form S-8, S-4 or comparable registration
statement), it will give written notice by registered mail, at least twenty (20)
days prior to the filing of each registration statement, to the Holders of its
intention to do so. If such Holders
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notify the Company within twenty (20) days after receipt of any such notice of
its or their desire to include any of the afore-described shares in such
proposed registration statement, the Company shall afford such Holders the
opportunity to have any such shares registered under such registration
statement, at the Company's sole cost and expense. The Company shall also use
its best efforts to cause the sale of such shares to be registered in up to ten
(10) states identified by the Holders, at the Company's sole cost and expense.
The Company shall bear all expenses, incurred in the preparation and
filing of such registration statements or post-effective amendment (and related
state registrations, to the extent permitted by applicable law) and the
furnishing of copies of the preliminary and final prospectus thereof to the
Holders, other than fees and expenses of Holders' counsel, and other than sales
commissions incurred by the then holders with respect to the sale of such
securities. Notwithstanding anything contained herein to the contrary, with
respect to Demand Registration Rights, the Company shall only be obligated to
bear all of such expenses with respect to the first Demand Registration Right
requested by a majority of the Holders, provided that with respect to any second
Demand Registration Right, the expenses shall be borne by the Holders included
thereunder on a pro-rata basis with the expenses to be borne by the Company with
respect to any securities included therein on behalf of the investors in the
Private Placement, as described above, and which pro-rata allocation shall be
based on the percentage of shares (including those shares underlying derivative
securities) being registered thereunder.
In the event Placement Agent Warrants are issued to B&B in
connection with the Private Placement, any demand registration rights with
respect to the securities issued upon exercise of the Placement Agent's Warrants
and upon exercise of the Warrants included in the Placement Agent's Warrants
(collectively, the "Warrant Securities") will be deemed to include the warrants
issuable pursuant to this Agreement and shares of common stock underlying the
warrants, and to the extent said demand registration rights are exercised, the
demand registration rights provided under this Section 3 shall also be deemed
exercised. In addition, any demand registration rights with respect to the
afore-described warrants and shares of Common Stock underlying the warrants,
will be deemed to include the Warrant Securities and to the extent said demand
registration rights under this Section 3 shall be exercised, the demand
registration rights provided for in the Placement Agent Warrants shall also be
deemed exercised.
4. Right of First Refusal. For a period of three years from the date of
this Agreement, the Company hereby agrees to afford to B&B the right to act as
the Company's exclusive managing underwriter or placement agent, as the case may
be, in any public offering(s) and private placement(s) to be effectuated by or
on behalf of the Company, on such terms no less favorable than any other
underwriter, broker-dealer, or placement agent, and with such compensation to be
determined on a deal-by-deal basis. Notwithstanding anything contained in this
Section 4 to the contrary, the foregoing right of first refusal shall not be
applicable to "Institutional Debt" financing arranged solely by the Company. For
purposes of the foregoing sentence, "Institutional Debt" shall mean indebtedness
for money borrowed from banks, or other traditional long-term institutional
lenders, such as insurance companies and pension funds. In the event B&B
determines not to so participate in any such financing and the terms thereof are
then subsequently changed, the Company shall afford B&B the opportunity to act
as the exclusive managing underwriter or placement agent,
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as the case may be, in any such financing as modified. Notwithstanding anything
contained in this Section 4 to the contrary, nothing hereunder shall obligate
B&B to so participate in any such financing.
5. Finder's Fee. In the event the Company effectuates a merger,
acquisition, consolidation, reorganization, recapitalization, business
combination or other transaction pursuant to which the Company acquires, is
acquired by or combines with another entity subsequent to the date hereof and on
or prior to one year from the date of termination of this Agreement,
irrespective of any reason for such termination, and such merger, acquisition,
consolidation, reorganization, recapitalization, business combination or other
transaction is effectuated as a result or consequence of any introduction made
directly or indirectly by B&B, including, without limitation, any introduction
made by any third party to whom the Company was initially introduced, directly
or indirectly, by B&B, or which transaction was initiated, directly or
indirectly, by B&B, then the Company hereby agrees to pay B&B the following cash
consideration, which payment shall be due and payable in cash on the date of any
such closing with respect thereto:
5% of the consideration from $1 and up to $5,000,000, plus
4% of the consideration in excess of $5,000,000 and up to
$10,000,000, plus
3% of the consideration in excess of $10,000,000 and up to
$15,000,000, plus
2% of the consideration in excess of $15,000,000 and up to
$20,000,000, plus
1% of the consideration paid in excess of $20,000,000.
In addition, the Company shall pay B&B a finders' fee in the event the
Company participates in any merger, acquisition, consolidation, reorganization,
recapitalization, business combination or other transaction not arranged,
directly or indirectly, by B&B, but for which B&B provides consulting services
to the Company, equal to the following percentages based upon the value of the
transaction:
3% of the consideration from $1 to $5,000,000, plus
2% of the consideration from $5,000,001 to $10,000,000, plus
1% of the consideration paid in excess of $10,000,000.
For purposes of this Agreement, "consideration" shall mean the value of
the transaction described herein and shall include all cash, the principal of
any notes executed as part of the purchase price for such acquisition, the
value, as determined in good faith by B&B, of any securities paid or exchanged
in connection with the transaction, and the amounts of any loans or other
obligations owed by the acquired entity and which are paid by the acquiring
entity as part of the purchase price for the acquisition. In the event B&B
agrees to assist the Company in raising capital to finance an acquisition, the
parties hereto hereby agree that the compensation to be paid to B&B for said
assistance shall be the subject an agreement, the terms of which are to be
mutually agreed to by and between the parties hereto.
6. Representations of the Company. The Company hereby represents and
warrants that any and all information supplied hereunder to B&B in connection
with any and all services to be performed hereunder by B&B for and on behalf of
the Company shall be true, complete and correct
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as of the date of such dissemination and shall not fail to state a material fact
necessary to make any of such information not misleading. The Company hereby
acknowledges that the ability of B&B to adequately provide financial consulting
services hereunder is dependent upon the prompt dissemination of accurate,
correct and complete information to B&B. The Company further represents and
warrants hereunder that this Agreement and the transactions contemplated
hereunder, including the issuance of the warrants hereunder, have been duly and
validly authorized by all requisite corporate action; that the Company has the
full right, power and capacity to execute, deliver and perform its obligations
hereunder; and that this Agreement, upon execution and delivery of the same by
the Company, will represent the valid and binding obligation of the Company
enforceable in accordance with its terms. The representations and warranties set
forth herein shall survive the termination of this Agreement.
7. Indemnification.
(a) The Company hereby agrees to indemnify, defend and hold
harmless B&B, its officers, directors, principals, employees, affiliates, and
shareholders, and their successors and assigns from and against any and all
claims, damages, losses, liability, deficiencies, actions, suits, proceedings,
costs or legal expenses (collectively the "Losses") arising out of or resulting
from: (i) any breach of a representation, or warranty by the Company contained
in this Agreement; or (ii) any activities or services performed hereunder by
B&B, unless such Losses were the result of the intentional misconduct or gross
misconduct of B&B or were the result of any information supplied by B&B; or
(iii) any and all costs and expenses (including reasonable attorneys' and
paralegals' fees) related to the foregoing, and as more fully described below.
(b) If B&B receives written notice of the commencement of any
legal action, suit or proceeding with respect to which the Company is or may be
obligated to provide indemnification pursuant to this Section 7, B&B shall,
within thirty (30) days of the receipt of such written notice, give the Company
written notice thereof (a "Claim Notice"). Failure to give such Claim Notice
within such thirty (30) day period shall not constitute a waiver by B&B of its
right to indemnity hereunder with respect to such action, suit or proceeding.
Upon receipt by the Company of a Claim Notice from B&B with respect to any claim
for indemnification which is based upon a claim made by a third party ("Third
Party Claim"), B&B may assume the defense of the Third Party Claim with counsel
of its own choosing, as described below. The Company shall cooperate in the
defense of the Third Party Claim and shall furnish such records, information and
testimony and attend all such conferences, discovery proceedings, hearings,
trial and appeals as may be reasonably required in connection therewith. B&B
shall have the right to employ its own counsel in any such action, but the fees
and expenses of such counsel shall be at the expense of B&B unless the Company
shall not have promptly employed counsel to assume the defense of the Third
Party Claim, in which event such fees and expenses shall be borne solely by the
Company. The Company shall not satisfy or settle any Third Party Claim for which
indemnification has been sought and is available hereunder, without the prior
written consent of B&B. If the Company shall fail with reasonable promptness
either to defend such Third Party Claim or to satisfy or settle the same, B&B
may defend, satisfy or settle the Third Party Claim at the expense of the
Company and the Company shall pay to B&B the amount of any such Loss within ten
(10) days after written demand therefor. The indemnification provisions
hereunder shall survive the termination of this Agreement.
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8. Amendment. No modification, waiver, amendment, discharge or change
of this Agreement shall be valid unless the same is evidenced by a written
instrument, executed by the party against which such modification, waiver,
amendment, discharge, or change is sought.
9. Notices. All notices, demands or other communications given
hereunder shall be in writing and shall be deemed to have been duly given when
delivered in person or transmitted by facsimile transmission or on the third
calendar day after being mailed by United States registered or certified mail,
return receipt requested, postage prepaid, to the addresses herein above first
mentioned or to such other address as any party hereto shall designate to the
other for such purpose in the manner hereinafter set forth.
10. Entire Agreement. This Agreement, along with the Escrow Agreement
and Common Stock Purchase Warrant entered into simultaneously herewith and the
Confidentiality, Proprietary Information and Inventions Agreement dated March
18, 1996, contains all of the understandings and agreements of the parties with
respect to the subject matter discussed herein. All prior agreements, whether
written or oral, are merged herein and shall be of no force or effect.
11. Severability. The invalidity, illegality or unenforceability of any
provision or provisions of this Agreement will not affect any other provision
of this Agreement, which will remain in full force and effect, nor will the
invalidity, illegality or unenforceability of a portion of any provision of this
Agreement affect the balance of such provision. In the event that any one or
more of the provisions contained in this Agreement or any portion thereof shall
for any reason be held to be invalid, illegal or unenforceable in any respect,
this Agreement shall be reformed, construed and enforced as if such invalid,
illegal or unenforceable provision had never been contained herein.
12. Construction and Enforcement. This Agreement shall be construed in
accordance with the laws of the State of Florida, without application of the
principles of conflicts of laws. If it becomes necessary for any party to
institute legal action to enforce the terms and conditions of this Agreement,
the successful party will be awarded reasonable attorneys' fees at all trial and
appellate levels, expenses and costs. Any suit, action or proceeding with
respect to this Agreement shall be brought in the state or federal courts
located in Dade County in the State of Florida. The parties hereto hereby accept
the exclusive jurisdiction of those courts for the purpose of any such suit,
action or proceeding. Venue for any such action, in addition to any other venue
permitted by statute, will be Dade County, Florida. The parties hereto hereby
irrevocably waive, to the fullest extent permitted by law, any objection that
any of them may now or hereafter have to the laying of venue of any suit, action
or proceeding arising out of or relating to this Agreement or any judgment
entered by any court in respect thereof brought in Dade County, Florida, and
hereby further irrevocably waive any claim that any suit, action or proceeding
brought in Dade County, Florida, has been brought in an inconvenient forum.
13. Binding Nature. The terms and provisions of this Agreement shall be
binding upon and inure to the benefit of the parties, and their respective
successors and assigns.
14. Counterparts. This Agreement may be executed in any number of
counterparts, including facsimile signatures which shall be deemed as original
signatures. All executed counterparts
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shall constitute one Agreement, notwithstanding that all signatories are not
signatories to the original or the same counterpart.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
CPI AEROSTRUCTURES, INC., a New York
corporation
By:____________________________________
Name:__________________________________
Title:_________________________________
BARBER & BRONSON INCORPORATED, a Florida
corporation
By:__________________________________
Steven N. Bronson, President
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