INVESTMENT BANKING SERVICES
AGREEMENT
AMERICAN CAPITAL FINANCIAL SERVICES,
INC.,
GLOBAL MONITORING SYSTEMS,
INC.
American
Capital Financial Services, Inc.
461 Fifth Avenue
26th Floor
New York, NY 10017
(212) 213-2009
(212) 213-2060
Dustin Smith,
Vice President
(c) 2002 American Capital
Financial Services, Inc.
INVESTMENT BANKING SERVICES
AGREEMENT
This Investment
Banking Services Agreement (the “Agreement ”) is
made as of this 22nd day of December, 2005 (the “Execution
Date” ), between Global Monitoring Systems, Inc., a
Delaware corporation (together with its subsidiaries, the
“Company ”) and American Capital Financial
Services, Inc., a Delaware corporation with its principal place of
business in Bethesda, Maryland ( “ACFS ”), to be
effective as of December 22, 2005 (the “Effective
Date ”).
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1.
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Whereas, the Company is primarily
engaged in the business of, among other things, Dosimetry services
and is owned by an affiliate of ACFS, American Capital Strategies,
Ltd. ( “ACAS” );
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2.
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Whereas, the Company wishes to enter
into a comprehensive investment banking agreement under which it
will commit to employ ACFS as financial advisor in any acquisition,
sale, merger or financing transactions entered into by the Company
and in other financial advisory work, including valuation,
structuring and negotiating, which ACFS is qualified to
perform;
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3.
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Whereas, ACFS has represented to the
Company that it has expertise and experience in such work;
and
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4.
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Whereas, the Company wishes to enter
into this Agreement with ACFS on the terms provided for
herein.
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NOW, THEREFORE, in
consideration of the mutual promises contained in this Agreement,
and intending to be legally bound hereby, the parties hereby agree
as follows:
B. SCOPE OF THE
AGREEMENT
This Agreement
relates to investment banking services, which shall be defined as
follows (and such definitions shall be equally applicable to both
the singular and plural form of the terms defined, as the context
may require):
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1.
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“Acquisition
Transactions” shall mean the acquisition by the
Company of any other business whether by purchase of stock or
assets in cash sale or for other consideration, or by merger in
which the Company is substantially the surviving entity.
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2.
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“ Sale
Transactions” shall mean sale of all or part of the
equity or assets of the Company in a cash sale or for other
consideration, or by a merger in which the Company is not
substantially the surviving entity.
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3.
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“Financing
Transaction” shall mean the sale of any equity or
debt securities by the Company.
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4.
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“Close ” or
“Closing” shall mean the day on which any
Acquisition, Sale or Financing Transaction (each, sometimes
referred to herein as a “ Transaction” )
occurs.
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C.
RESPONSIBILITIES OF ACFS
ACFS will perform
the following work as the Company’s exclusive
agent:
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1.
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RAISING FINANCING
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ACFS will, if the Company chooses to
use an agent for such purpose, assist the Company in placing any
equity or debt securities.
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2.
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ACQUISITION AND MERGER
TRANSACTIONS
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ACFS will assist the Company in
researching, evaluating, initiating, structuring and closing any
potential Transaction.
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3.
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FINANCIAL ANALYSIS
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As
appropriate, ACFS will assist the Company in gathering and
reviewing data to build a financial model (
“Model” ) of the Company, and in using such a
Model to evaluate the Company and any proposed Transaction. The
Model will integrate historical financial performance of the
Company with projections subsequent to any Transaction, and will
include a detailed income statement, balance sheet, cash flow
statement, valuation, and a detailed set of assumptions.
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The
Model will assist in evaluating the capital requirements of the
Company; potential merger and acquisition synergies; and the impact
of any Transaction on shareholder value and liquidity.
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4.
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MANAGEMENT AND BOARD OF
DIRECTORS
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ACFS will make continuing reports to
the Company’s management and Board of Directors regarding its
work for the Company, as requested.
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5.
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STOCKHOLDER
COMMUNICATIONS
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ACFS will assist the Company in
communicating with, educating, and informing its stockholders about
any potential Transaction.
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6.
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COORDINATION
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ACFS will assist the Company in
coordinating the financial institutions, legal counsel, valuation
firms, accountants, and any other professional advisors who may be
required for a Transaction.
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ACFS and the
Company will inform each other on a timely basis of any and all
material developments regarding matters to which this Agreement
pertains, throughout the life of this Agreement.
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ACFS
understands and agrees that it is not a general agent for the
Company, and it is not granted any right or authority to assume or
to create any obligation or responsibility or to make any
representation or warranty on behalf of or in the name of the
Company, or to bind the Company in any manner
whatsoever.
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1.
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EXPENSES
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The
Company will reimburse ACFS for all reasonable out-of-pocket
expenses that ACFS may incur under this Agreement from the
Effective Date to any Close or the earlier abandonment or
termination of any Transaction. Such expenses will include travel,
telephone, courier, postage, printing and other expenses incurred
by ACFS in the performance of its work under this Agreement (the
“ Expenses ”).
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If
this Agreement is Terminated (as defined below) pursuant to the
terms of this Agreement, all Expenses owed shall be paid to ACFS at
the time of the Termination.
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2.
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MANAGEMENT FEE
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For
so long as ACAS has an investment in any of the Company’s
debt or equity securities, the Company shall pay to ACFS an annual
Management Fee for each calendar year commencing on the date hereof
equal to $1,625,000. The Management Fee will be payable quarterly
in advance. If any monthly installment of the Management Fee is not
paid when due because of prohibitions in any credit agreement to
which the Company is a party, such fee shall accrue and become
payable promptly at such time as such payment is not so
prohibited.
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3.
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PERFORMANCE FEES
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Upon Closing of any Transaction, the
Company will pay ACFS, in cash, performance fee(s) (the “
Performance Fee ”) according to the following
schedule:
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a)
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Acquisition Structuring
Fee
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Upon Closing of an Acquisition
Transaction the Company will pay ACFS a “Structuring
Fee” equal to the sum of:
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Five percent (5%) of the first two
million dollars of the purchase price of the assets or equity of
the business purchased or acquired by merger plus the value of any
existing debt assumed from the purchased business (together, the
“ Purchase Price ”); plus
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Four percent (4%) of the second two
million dollars of the Purchase Price; plus
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Three percent (3%) of the third two
million dollars of the Purchase Price; plus
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Two
percent (2%) of the fourth two million dollars of the Purchase
Price; plus
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One
percent (1%) of the Purchase Price in excess of $8 million
dollars (the entire above calculation is referred to herein as the
“Double Lehman Formula”);
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Example:
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