Exhibit 10.4
FALCON INTERNATIONAL CONSULTING LIMITED
PO BOX 173
KINGSTON CHAMBERS
ROADTOWN
TORTOLA
BRITISH VIRGIN ISLANDS
Blackwater Midstream.
28 May 2008
Gentlemen:
1. INTRODUCTION
1.1 This letter confirms the basis on which Blackwater Midstream. has
engaged us, Falcon International Consulting Limited, to provide
services with respect to introducing you to potential investors, and
raising capital for you on a best efforts basis.
2. DEFINITIONS
In this letter, the following expressions shall have the following
meanings:
"Closing" means the date on which a Transaction is completed. If
funding is received and accepted by you in more than one tranche, there
may be multiple Closings.
"FSA" means Financial Services Authority.
"Letter" means this letter and any appendices and schedules attached.
"BWMS" means Blackwater Midstream., a Louisiana (USA) corporation
"Relevant Person" means subsidiaries, affiliates, directors, officers,
employees, consultants, agents of subsidiaries and affiliates and
agents of successors and assigns of Falcon International Consulting
Ltd.
"Selling Memorandum" means a private placement memorandum or other
offer document prepared on behalf of BWMS.
"Transaction" means a raising of capital for BWMS.
"UK Falcon" means Falcon Capital LLP, the UK affiliate of Falcon
International Consulting Ltd.
3. OUR SERVICES
3.1 We agree to perform such of the following advisory services as
you may reasonably and specifically request, including:
3.1.1 familiarising ourselves to the extent we deem it
appropriate and feasible with your business,
management, operations, finances and prospects;
3.1.2 assessing the strengths, weaknesses and opportunities
available to you which may include an examination of
the demand of the market for your goods and services;
3.1.3 undertaking an evaluation of your management;
3.1.4 preparing budget projections and developing financial
models with you;
3.1.5 identifying and evaluating with you candidates for a
potential Transaction;
3.1.6 assisting you in preparing a Selling Memorandum
describing yourselves and your business for
distribution to potential parties to a Transaction,
which may involve the preparation of specific
additional documents individually tailored for each
potential party to a Transaction;
3.1.7 contacting potential candidates which we together
have agreed may be appropriate for a potential
Transaction, whether it be a specific candidate or a
class of candidates; in rendering such services, we
may meet with representatives of such candidates and
provide such representatives with such information
about you as may be appropriate, subject to the
confidentiality provisions of Section 5 and provided
that no information we provide will be inconsistent
with any information contained in the Selling
Memorandum;
3.1.8 developing strategies with you to inform and educate
potential candidates for parties to a Transaction;
3.1.9 working on your behalf with potential candidates for
parties to a Transaction to ensure they have a full
understanding of the potential value of you and your
business;
3.1.10 advising and assisting you in considering the
desirability of effecting a Transaction and, if you
believe such a Transaction to be desirable, in
developing and implementing a general strategy for
accomplishing a Transaction or, if more than one, a
series of Transactions;
3.1.11 advising and assisting your senior management in
making presentations to potential parties to
Transactions;
3.1.12 advising and assisting you in the course of the
negotiation of a Transaction, and actively
participating in such negotiations and in the
drafting of suitable sale and purchase agreements, in
each case if appropriate; and
3.1.13 assisting you, where appropriate, after the
completion of a Transaction (or Transactions), in
your ongoing relationship with and obligations to
investors and/or any other relevant parties to the
Transaction(s), including (without limit) assisting
you in meeting the conditions and objectives agreed
pursuant to the Transaction(s).
3.2 We will not be required to provide services other than those
referred to above, and in particular, we will not be
responsible for providing or arranging loan facilities or
underwriting services. Any other services or specialist advice
(such as, without limit, advice on legal, regulatory,
accounting, actuarial or taxation matters) shall be
specifically arranged by you with other specialist advisers
and we will not have any responsibility or liability in
respect of any services or advice provided to you by any other
person but we will be responsible for any services provided to
you by our subsidiaries and affiliates.
3.3 You will furnish us, and if you enter into negotiations with a
counterparty regarding a possible Transaction, request such a
counterparty to furnish to us, such information as we
reasonably request in connection with the performance of our
services hereunder. You understand and agree that, in
performing our services hereunder, we will use and rely on the
information you have provided, as well as publicly available
information relating to you and any potential counterparty,
and we do not assume responsibility for independent
verification of any information whether publicly available or
otherwise furnished to us relating to you or any potential
counterparty, including, without limitation, all financial
information, forecasts or projections considered by us in
connection with the rendering of our services. Accordingly, we
shall be entitled to assume and rely on the accuracy and
completeness of all such information and we are not required
to conduct a physical inspection of any property or assets or
prepare or obtain any independent evaluation or appraisal of
any of your assets or liabilities or those of any potential
counterparty. With respect to any financial forecast and
projections made available to us by you or any counterparty
and used by us in our analysis, we shall be entitled to assume
that such forecast and projections have been reasonably
prepared on a basis reflecting the best currently available
estimates and judgements of your management or the management
of any potential counterparty to a Transaction as the case may
be.
4. ASSOCIATES AND AFFILIATES
4.1 In providing our services, we will make use of associate and
affiliate companies. In particular, we will utilise the
services of our UK affiliate, Falcon Capital LLP (UK FALCON),
authorised and regulated by the FSA in the UK to transmit a
Selling Memorandum on your behalf. We will instruct UK Falcon
as appropriate. You will become the indirect customer of UK
Falcon and will have the benefit of the obligations they owe
you as a regulated entity. Your attention is drawn to the
schedule attached which sets out various matters which UK
Falcon is required to bring to your attention pursuant to the
rules and guidance of the FSA (FSA RULES).
4.2 You authorise UK Falcon as your representative to transmit the
Selling Memorandum to potential parties to a Transaction (if
appropriate, after completion of a confidentiality agreement
in a form acceptable to you). You hereby acknowledge that all
information contained in the Selling Memorandum has been
provided by you or based on information provided by you or
third parties on your behalf, and you will be solely
responsible for the contents thereof unless it is found in a
final judicial determination or a settlement equivalent
thereto that we have acted in a manner which is found to
constitute bad faith or wilful misconduct on our part or the
part of any of our affiliates or subsidiaries.
5. CONFIDENTIALITY
5.1 All material non-public information concerning you or your business
which is given to us by or on your behalf will be used solely in the
course of the performance of our services hereunder and will be treated
confidentially by us so long as it remains non-public. Neither we nor
any other Relevant Person will trade in the securities of SKYP while we
are in possession of such material non-public information. We will not
disclose such information to any third party, except (i) disclosure to
candidates for a potential Transaction who have agreed to retain such
information in confidence and who have agreed not to trade in the
securities of SKYP while in possession of such material non-public
information, and (ii) as otherwise required by law or by applicable
regulations or by judicial or regulatory process (in which case we will
first obtain your consent, which you will not unreasonably withhold).
The obligations under this paragraph shall terminate on the second
anniversary of the date of the termination of our engagement under this
agreement.
6. FEES
6.1 You will pay us for our services fees equal to the following
amounts, calculated solely with respect to the cash proceeds
of Transactions with counterparties that we have introduced to
you:
6.1.1 A CASH FEE EQUAL TO (I) 10% CASH ON CASH ($4,000,000
RAISED = $400,000 CASH FEE)
6.1.2 an equity fee paid in BWMS restricted common stock
(EQUITY FEE SHARES), calculated at $2.00 per share,
equal to (i) 10% of cash funded into your designated
account ($5,000,000 raised = $500,000 in Equity Fee
Shares at offering price), or 250,000 shares
Falcon has the right to assign one Board Seat
6.2 The Equity Fee Shares will not be registered under the
Securities Act of 1933, as amended. We represent and
acknowledge that we have read and understand all of the
matters contained under the heading "Risk Factors" in the
Selling Memorandum, and that we are acquiring the Equity Fee
Shares as an investment for our own account, and not for the
purpose of a distribution. We also acknowledge that
certificates representing the Equity Fee Shares will bear a
legend substantially as follows:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS AND NEITHER THE SECURITIES NOR ANY INTEREST
THEREIN MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT OR SUCH LAWS OR AN
EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND SUCH LAWS
WHICH, IN THE OPINION OF COUNSEL FOR THIS CORPORATION, IS
AVAILABLE."
7. TRANSACTIONS
7.1 The offering will commence on 1 June 2008, and will run
through 31 July 2008. The offering can be extended with the
mutual consent of both parties.
7.2 Upon agreement of this letter BWMS authorises Falcon
International Consulting Limited to undertake a Transaction
for up to $5,000,000, at a valuation of $53 million post
money, which amount can be expanded with the mutual consent of
both parties. The offering will have no fixed minimum
8. EXPENSES
8.1 In addition to any fees that may be payable to us hereunder
and regardless of whether any Transaction is proposed or
closed, you hereby agree from time to time to reimburse us for
all our reasonable travel and other out of pocket expenses
incurred in connection with any actual or proposed Transaction
arising out of or in connection with our engagement by you on
the terms of this letter, for which we receipts will be
submitted. Expenses will be capped at 2% of the transaction
9. TERMINATION
9.1 Our engagement hereunder may be terminated by either party at
any time with or without cause by written notice given by one
party to the other. In the event that our engagement is
terminated by you without a Closing having occurred and, at
any time prior to the expiration of one year after such
termination by you, a Transaction is closed with a
counterparty introduced by us or you enter into a definitive
agreement which leads to a Transaction with a counterparty
introduced by us, we shall be entitled to our Advisory Fee;
and the provisions of this Section and of Sections 6 and 10
-13 shall survive such termination.
10. PUBLICITY
10.1 In the event of the Closing of any Transaction we shall have
the right at our own expense to disclose our participation in
such Transaction, subject to your consent with respect to both
the content and timing of that disclosure, which consent will
not be unreasonably withheld.
11. SCOPE OF RESPONSIBILITY
11.1 We and any Relevant Persons shall not be liable to you, or any
person claiming through you, for any claim, loss, damage,
liability, cost or expense suffered by you or any such other
person arising out of or related to our engagement hereunder,
except for any claim, loss or expense that arises primarily
out of or is based primarily upon any action or failure to act
by us (other than an action or failure to act undertaken at
your request or with your express written consent) that is
found in the final judicial determination (or a settlement
equivalent thereto) to constitute bad faith, wilful misconduct
or gross negligence on our part or a breach of any obligation
owed to you by UK Falcon pursuant to the FSA Rules or the
regulatory system.
12. INDEMNITY
12.1 You agree to indemnify and hold harmless each and every
Relevant Person to the full extent lawful against any and all
claims, losses, damages, liabilities, costs and expenses as
incurred (including all reasonable fees and expenses of
counsel and all reasonable travel and other out of pocket
expenses incurred) in connection with the investigation of,
preparation for, and defence of any pending or threatened
claim or any litigation or other proceedings arising
therefrom, whether or not litigation is filed and whether or
not any Relevant Person is made a party, arising out of or
related to any actual or proposed Transaction or our
engagement hereunder; provided there shall be excluded from
such indemnification any claims, losses, damages, liabilities,
costs or expenses that arise primarily out of or are based
primarily upon any action or failure to act by us (other than
an action or failure to act undertaken at your request or with
your express written consent) that is found in a final
judicial determination (or a settlement equivalent thereto) to
constitute our bad faith, wilful misconduct or gross
negligence.
12.2 You will not without our prior written consent settle any
litigation relating to our engagement hereunder unless such
settlement includes an express, complete and unconditional
release of each Relevant Person with respect to all claims
asserted in such litigation or relating to our engagement
hereunder, such release to be set forth in any instrument
signed by all the parties to such settlement.
13. GOVERNING LAW AND JURISDICTION
13.1 This agreement shall be governed by and construed in
accordance with the laws of the British Virgin Islands without
regard to the conflicts of laws provisions thereof. You agree
to submit to the non-exclusive jurisdiction of the courts of
the British Virgin Islands located in Roadtown, Tortola,
British Virgin Islands in connection with any dispute relating
to the terms of this letter or any of the matters contemplated
by it and waive to the fullest extent permitted by law the
right to move to dismiss or transfer any action brought in
such court on the basis of any objection to jurisdiction or
venue.
13.2 You hereby irrevocably consent to the service of process in
any such proceeding by the mailing of copies of such process
to you at the last address you have provided to us.
14. OUR DUTIES
14.1 You agree and understand that we have been engaged by you and
you alone and our engagement is not to be deemed to be on
behalf of and nor is it intended to confer rights upon any
other person including any shareholder, partner or other owner
of you or any person not a party to the agreement set out in
this letter as against us or any Relevant Person. Unless
otherwise expressly agreed, no one other than you is
authorised to rely on your engagement of us in any statements,
advice, opinions or conduct by us and you will not disclose
such statements, advice, opinions or conduct to others (except
your professional advisers or as required by law). Without
limiting the foregoing, any opinions or advice rendered to
your board or management in the course of your engagement of
us are for the purposes of assisting your board and management
as the case may be in evaluating a Transaction and do not
constitute a recommendation to any person concerning action
that such person might or should take in connection with the
Transaction. Our role herein is that of an independent
contractor, nothing herein is intended to create or shall be
construed as creating any fiduciary relationship between us or
any partnership between us.
15. DISCLOSURE
15.1 You agree and acknowledge that we may have and may continue to
have relationships with other parties in the course of which
we may acquire information which is of interest or benefit to
you. We have no obligation to disclose any information to you.
You shall have no entitlement to share or participate in any
revenues we derive from any engagement we may undertake.
16. MISCELLANEOUS
16.1 This letter contains the entire agreement between us and
supersedes all prior agreements, arrangements and
understanding (both written and oral) and cannot be amended or
otherwise modified except in writing and signed by both of us.
The provisions of this agreement shall be binding on the
successors and the assigns of each of us. All fees and other
amounts to be paid to us pursuant to the terms of this letter
shall be paid in U.S. dollars or NCOA shares, as specified,
free and clear of and without deductions or withholding on
account of, taxes of any kind, provided that we shall have
provided you such information as you may reasonably request in
order that you may comply with applicable laws and
regulations.
17. ACCEPTANCE
17.1 Can you please confirm your acceptance of our engagement on
the terms set out in this letter by signing, dating and
returning the attached copy. The top copy is for you to keep
for your records.
Yours truly
For FALCON INTERNATIONAL CONSULTING LIMITED
By: ______________________________
We hereby confirm your engagement on and subject to the terms and
conditions set out in this letter.
For BLACKWATER MIDSTREAM
By: ______________________________
Michael Suder