EXHIBIT 10.1
LIPPERT/HEILSHORN
_________________
& ASSOCIATES, INC.
EXCELLENCE IN INVESTOR RELATIONS
800 Third Avenue 17th FLOOR * New York, NY 10022
212.838.3777 * Fax 212.838.4568
WWW.LHAI.COM
September 2,2008
Mr. Kenneth C. Barker
Chief Executive Officer, Director
NATURALLY ADVANCED TECHNOLOGIES, INC.
1008 Homer Street
Suite 402
Canada, V6B 2X1
Dear Ken:
This letter confirms the following agreement between our respective companies
(the "Agreement"):
1. NATURALLY ADVANCED TECHNOLOGIES, INC. ("Company") hereby retains
Lippert/Heilshorn & Associates, Inc., ("LHA"), effective September 2, 2008,
for implementation of Company's financial communications program (the
"Program"). (As the context so requires, each of the Company and LHA may be
referred to herein, individually and collectively, as the "Party" and the
"Parties", respectively.).
2. The services ("Services") to be performed by LHA on behalf of the Company
and under the Program will include, but are not limited to, the following:
a. Develop, for approval and implementation by the Company, a program
plan of activities designed to achieve agreed upon objectives and
provide appropriate services of LHA's professional staff;
b. Provide objective "counsel on a full spectrum of strategic investor
relations and opportunities issues including best practices, material
disclosure, corporate governance and crisis situations;
c. Conduct a mini perception audit to gage the Company's reputation on
Wall Street;
d. Prepare a Corporate Fact Sheet to market the Company to various
investor constituencies;
e. Assist in the drafting, finalization and issuing of all press releases
subject to the Company's prior approval;
f. Assemble and maintain quarterly buy/sell-side industry peer group
matrixes for the Company;
g. Arrange periodic set of meetings with locations to be determined with
buy/sell-side analysts, retail brokers and investment bankers if
appropriate and provide a feedback document for the same;
h. Coordinate conference call activities between Company management and
key investment professionals, when appropriate, i.e. for the
disclosure of Company quarterly results, major news, including
scripting prepared remarks, previewing Q&A sessions and a detailed
feedback document for the same;
i. Provide written quarterly board reports reviewing activities initiated
by LHA on the Company's behalf and anticipated for the following
quarter, unless otherwise specified;
j. Prepare, subject to the Company's prior approval, and distribute
letters to shareholders (if applicable);
k. LHA to take the marketing lead for both Canadian and U.S. markets for
the Company;
l. List the Company as a client in LHA's Client Roster;
m. Include the Company in LHA's Client List sent to investors who inquire
about LHA clients; and
n. Periodic reviews of the Company's descriptions and coverage to assure
accuracy in various Electronic Bulletins such as Bloomberg and Dow
Jones.
3. Subject to the Company's prior receipt of approval (the "Approval), if
required, from the TSX Venture Exchange (the "Exchange") of the terms and
conditions of this Agreement as set forth in paragraph 17 below (and such
Approval date being the "Effective Date" of this Agreement for all
purposes), the initial term (the "Term") of this Agreement shall be the
twelve (12) month period commencing on the Effective Date hereof.
Thereafter, this Agreement shall automatically renew for successive two (2)
month periods unless either Party provides notice to the other Party of
non-renewal with the notice to be sent no later than sixty (60) calendar
days prior to the end of the original Term or any extended term thereof.
However, the Company may terminate this Agreement at anytime after the
initial ninety (90) calendar day period during the initial Term with sixty
(60) calendar day's advance notice to LHA. During said sixty (60) day
notice period the Parties shall continue to perform all of their
obligations under this Agreement, including LHA's Services and the
Company's payment of the monthly retainer fee, stock options and the
reimbursement of expenses as set forth herein.
4. During the Term and during the continuance of this Agreement, and in
consideration of the Services being provided hereunder, the Company shall
pay and provide to the LHA the following:
a. Monthly retainer fee payments:
o From the Effective Date through October 31, 2008; $15,000.00 per
month pro rated from the Effective Date; and
o From November 1, 2008 through August 31, 2009; $9,000.00 per
month.
In this respect the Company shall provide LHA with an initial
$30,000.00 retainer payment to cover the first two (2) months of
the monthly retainer fee under this Agreement immediately upon
the Effective Date hereof.
Should this Agreement be continued after the initial Term hereof,
and commencing on September 1, 2009, and on each anniversary year
thereafter during the further continuance of this Agreement, both
Parties agree that the monthly fee retainer shall be increased by
not less than five percent (5%) from the previous period in order
to offset LHA's increased operating expenses resulting from the
continuance of this Agreement.
b. Stock Option:
Effective on the Effective Date hereof LHA or, at LHA's sole and
absolute discretion, LHA's principals or employees who will be
responsible for the Services being provided hereunder, will be granted
an incentive stock option or options (collectively, the "Option") to
acquire up to an aggregate of 100,000 common shares of the Company
(each a "Share"), at an Option exercise price of Cdn.$l.25 per Share;
and representing the Fair Market Value of the Company's common shares
as traded on the Exchange on the execution date hereof, for a period
of five years from the Effective Date hereof, and vesting, as to
exercise, equally over 18 months from the Effective Date, all in
accordance with the Company's current Stock Option Plan and the
current policies of the Exchange.
5. In the event that LHA is required by the Company to perform services
outside the scope of the Services otherwise agreed upon under paragraph 2
hereof (collectively, the "Outside Services"), then LHA, with the prior
written approval of the Company, will be entitled to invoice the Company
for such Outside Services at LHA's standard billable hourly rates, as
listed in Appendix 2 which is attached to this Agreement, for LHA's
participating principals and staff, as they are required to carry-out such
Outside Services, plus all agreed upon expenses for the same.
6. The Company shall be responsible for all pre-approved and reasonable and
necessary expenses and disbursements (collectively, the "Expenses") made
and incurred by LHA on the Company's behalf and including, but not limited
to, all pre-approved long distance telephone calls and in-house expenses
(said types of Expenses being detailed in Appendix I which is attached to
this Agreement). All LHA partner air travel scheduled for longer than two
(2) hours will, by agreement, be undertaken through "Business Class". At
the end of each month LHA shall invoice the Company for said pre-approved
Expenses and each invoice shall itemize all Expenses and the Company shall
reimburse LHA for them. LHA's invoices to the Company will be dated as of
the 1st of each month and are due and payable within thirty (30) calendar
days of presentment to the Company. In the event that an LHA invoice is not
paid in full within sixty (60) calendar days from invoice date, LHA shall
have the right to either suspend Services hereunder until such time as all
unpaid invoices are paid in full or terminate this Agreement in accordance
with paragraph 3 hereof.
7. Recognizing that each Party's most highly valued resource is its
professional staff, each Party hereby agrees that it shall not employ, hire
or retain, or recommend to others the employment, hiring or retention of,
any person as identified by the other Party as presently employed by the
other Party without the prior written consent of the other Party. This
limitation will expire two (2) years after any such person has left the
employ of either Party. Upon any such breach of this provision by any Party
hereto, both Parties hereby agree that, in addition to any relief at law or
in equity as may be granted through arbitration and by a court of competent
jurisdiction, liquidated damages will due and owing by the Party in the
wrong to the harmed Party equal to three (3) times the last annualized
total compensation paid by the harmed Party to any such person.
8. LHA acknowledges its responsibility to use reasonable efforts to preserve
the confidentiality of any information disclosed by the Company on a
confidential basis to LHA, except for any disclosures required by court
order, subpoena or other judicial process for which LHA agrees to provide
immediate notice of to the Company in advance in order that the Company may
protect its interests.
9. All materials produced by LHA on behalf of the Company are the Company's
property and all rights in such materials are hereby granted to the Company
by LHA. However, such materials will not be sent to the Company until LHA's
receipt of final payment of all amounts invoiced by it to the Company,
subject to Company's right to question Expenses. These materials include
all print collateral and electronic documents such as fax lists and email
lists.
10. The Company understands and acknowledges that LHA will rely upon the
accuracy of all information (collectively, "Information") provided to it by
Company. The Company shall have full responsibility and liability to LHA
for such Information and the Company shall indemnify and hold LHA harmless
from and against any demands, claims, judgments and liabilities related
thereto (collectively, any "Claims Against LHA"). The Company shall
reimburse LHA for amounts payable by LHA in settlement of or in payment of
any Claims Against LHA resulting from LHA's use of the Information and all
costs and expenses incurred by LHA in connection therewith, including
without limitation, reasonable attorney's fees and costs of defending
Claims Against LHA; provided that the Company is given reasonable notice of
such Claims by LHA and elects in writing addressed to LHA to assume the
defense of such Claims, subject to LHA's agreement to settle or pay any
such claims.
11. LHA understands and acknowledges that it will only utilize the Information
in connection with its Services and LHA hereby assumes full responsibility
and liability to the Company for such utilization. LHA shall have full
responsibility and liability to Company for using the Information
accurately in connection with its Services and LHA shall indemnify and hold
the Company harmless from and against any demands, claims, judgments and
liabilities related thereto (collectively the "Claims Against The
Company"). LHA shall reimburse the Company for amounts payable by the
Company in settlement of or in payment of any Claims Against The Company
resulting from LHA's negligent use of the Information in connection with
the Services and all costs and expenses incurred by LHA in connection
therewith and including, without limitation, reasonable attorney's fees and
costs of defending Claims Against The Company; provided that LHA is given
reasonable notice of such Claims Against The Company by the Company and
elects in a writing addressed to LHA to assume the defense of such Claims
Against The Company, subject to the Company's agreement to settle or pay
any such claims.
12. This Agreement constitutes the entire understanding and agreement between
the Parties with respect to the subject matter here of and all prior
contemporaneous understandings; negotiations and agreements are merged
herein.
13. The Agreement may not be altered, extended, or modified nor any of its
provisions waived, except by a document in writing signed by the Party
against whom such alteration, modification, extension or waiver is sought
to be enforced.
14. A waiver by either Party of any breach, act or omission of the other Party
under this Agreement is not to be deemed a waiver of any subsequent similar
breach, act or omission.
15. The terms and provisions of this Agreement shall be binding, upon and shall
inure to the benefit of each of the Parties hereto and their respective
successors and assigns.
16. Any controversy or claim arising out of or relating to this Agreement, or
the breach thereof, shall be settled by arbitration in the City of New
York, State of New York, U.S.A., in accordance with the rules of the
American Arbitration Association, and judgment upon the award rendered by
the arbitrator(s) may be entered in any court having jurisdiction.
17. The Parties hereby acknowledge and agree that the effectiveness of this
Agreement, and the ability for LHA to provide any Services under the same,
is subject to the Company's prior filing and, if applicable, Approval of
the same with the Exchange together with such other supporting
documentation as may be required under Exchange policy which may include,
without limitation, either an Exchange Form 2A (PIF) or Form 2C1
(Declaration) from LHA and an undertaking from the Company to file all
materials prepared pursuant to this Agreement with the Exchange. As a
consequence, the Company will use its reasonable commercial efforts to file
this Agreement and all supporting documentation with the Exchange within
five (5) business days of the execution of this Agreement by both Parties.
In addition, the Parties hereby also acknowledge and agree that, subject to
the prior review and policies of the Exchange, it may be a further
condition of the Approval and the resulting Effective Date and
effectiveness of this Agreement that no Services or payments may be made
hereunder without the prior written Approval of the terms and conditions of
this Agreement by the Exchange; the failure of which, if required, making
this Agreement void and of no force and effect.
18. The Parties will from time to time after the execution of this Agreement
make, do, execute or cause or permit to be made, done or executed, all such
further and other acts, deeds, things, devices and assurances in law
whatsoever as may be required to carry out the true intention and to give
full force and effect to this Agreement. The situs of this Agreement is New
York, New York,, and for all purposes this Agreement will be governed
exclusively by and construed and enforced in accordance with the laws and
Courts prevailing in the State of New York. This Agreement may be signed by
the Parties hereto in as many counterparts as may be necessary, and via
facsimile if necessary, each of which so signed being deemed to be an
original and such counterparts together constituting one and the same
instrument and, notwithstanding the date of execution, being deemed to bear
the execution date of this Agreement. The Parties have not created a
partnership and nothing contained in this Agreement shall in any manner
whatsoever constitute any party the partner, agent or legal representative
of the other party, nor create any fiduciary relationship between them for
any purpose whatsoever.
If the foregoing correctly states our understandings, please execute the
enclosed two copies of this Agreement in the spaces provided for your signature
below and return one copy to the undersigned. We look forward to a long and
mutually successful relationship with your exciting company.
Very truly yours,
LIPPERT/HEILSHORN & ASSOCIATES, INC.
By: KEITH L. LIPPERT
________________________________
Keith L. Lippert
By: JOHN W. HEILSHORN
________________________________
John W. Heilshorn
Agreed to and Approved
this 2nd day of September, 2008.
NATURALLY ADVANCED TECHNOLOGIES, INC.:
By: /s/ KENNETH C. BARKER
_____________________
Kenneth C. Barker
APPENDIX 1
MEMORANDUM
TO: CLIENTS
FROM: LIPPERT/HEILSHORN & ASSOCIATES, INC.
ACCOUNTING DEPARTMENT
SUBJECT: IN-HOUSE EXPENSES
LHA provides documentation, in the form of receipts and back up, for all
expenses incurred by Third-Party Vendors utilized on clients' behalf. In house
expenses, including photocopying, local telephone, and access to Bloomberg
Business News on-line service are expenses, which are, incurred monthly by LHA
on clients' behalf. The following is an explanation of these expenses for which
documentation is not provided in monthly invoices.
Photocopying
Photocopying costs are charged to clients at the rate of $0.15 per sheet of
standard white paper and $0.20 per sheet of LHA bonded letterhead. This rate
covers the costs of paper, machinery and photocopier operator utilized in the
production of client informational kits, distribution of press releases, press
articles, etc.
Local Telephone
Local telephone costs are charged to clients on a pro rated weighted basis. The
partner's weighting of the average is determined by the client's activity during
the billing period. These activities pertain to investor inquiries,
telemarketing press releases, conference call marketing and investor meetings.
Bloomberg Business News Service
On-line access to Bloomberg Business News Service is allocated to clients at a
rate of $150.00 per month.
Third - Party Vendors
Due to the volume of business LHA provides to its vendors, the agency has been
successful in obtaining volume discounts.
APPENDIX 2
Listed below, are the hourly rates for LHA Principals and Staff whom, if
required, will perform Outside Services outside of the scope of IR Services
outlined in paragraph 2 of this Agreement:
o Partner: $500
o Managing Director/Group Leader: $400
o Senior Vice President: $350
o Vice President: $300
o Assistant Vice President: $250
o Senior Account Executive: $200
o Account Executive: $150