Letter of Agreement - Carlyle SEAG and Arabian Shield Development Co.
Letter of Agreement
This Letter of Agreement is made this 27th day of March, 1995 by and
between Carlyle SEAG ("SEAG") and Arabian Shield Development Company ("ASDC").
WHEREAS this Letter of Agreement sets forth that ASDC wishes to enter
into a contractual arrangement retaining SEAG as its financial advisor in
connection with the financing of the Al Masane Mining Project ("the Project");
and
WHEREAS SEAG is currently disposed to provide certain financial
advisor services;
THEREFORE, it is agreed that the scope of the services to be provided
by SEAG will include, but is not limited to, (1) advising on the capitalization
structure (SIDF, Commercial Debt and Equity) of the newly established Saudi
company "Newco", established for the Project; (2) raising of capital for
project implementation and (3) assisting ASDC in the filing of all licenses and
needed documents for regulatory purposes.
It is further agreed that ASDC shall prepare or cause to be prepared
necessary loan documentation and supporting information including a full
feasibility study, or as agreed by SEAG, ASDC shall provide SEAG all necessary
assistance in the accomplishment of the same.
Accordingly, SEAG will receive the following compensation for services
rendered in its role as financial advisor.
1. SEAG will receive a retainer payment of two hundred and fifty thousand
US dollars ($250,000), to cover a period of one year in duration, seventy five
thousand dollars ($75,000) of which is payable by ASDC upon the signing of this
Agreement, and twenty five thousand ($25,000) monthly thereafter. In no case
or circumstances shall SEAG receive a retainer payment of less than one hundred
twenty five thousand US Dollars ($125,000).
2. SEAG will receive cash compensation equaling two and one quarter
percent (2 1/4%) of the total capital value, inclusive of debt and equity
funding, of the Al Masane Project in recognition of SEAG's role in the
financial structuring of the Project and in providing financial and such other
assistance as may be provided.
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3. SEAG will also receive a cash compensation fee totaling five percent
(5%) of the amount of equity funds raised from equity investors up to US twenty
five million ($25,000,000); an additional cash compensation fee totaling three
percent (3%) for equity funds raised from investors between US twenty five
million ($25,000,000) and US fifty million ($50,000,000); an additional cash
compensation fee totaling two percent (2%) for equity funds raised from
investors between US fifty million ($50,000,000) and US seventy five million
($75,000,000); an additional cash compensation fee totaling one percent (1%)
for equity funds raised from investors equal to or above US seventy five
million ($75,000,000).
4. In addition SEAG shall also be entitled to receive compensation in the
form of an option to purchase two million shares (2,000,000), or approximately
10%, of ASDC's common stock, during a period of five (5) years, commencing upon
the first closing of either the debt or equity portion of the financing for
the Al Masane Project, at an exercise price of US one dollar ($1) per share.
Such issuance will be made in compliance with Rule 144 of the SEC. It is
understood that standard anti-dilution provision will be in effect for the full
period of the option.
5. SEAG shall nominate one member of the Board of Directors in its next
annual meeting of the shareholders to be held on May 9, 1995. SEAG shall
nominate a second Board member upon the closing of the financing for the Al
Masane Project.
6. SEAG reserves the right and at its sole discretion to withdraw from
this Agreement, and will give ASDC one month's notice prior to its withdrawal,
if SEAG determines that the transaction is no longer reasonably viable based on
due diligence findings; availability of financing, especially SIDF funding
and/or otherwise adverse material changes. In such event SEAG shall not be
entitled to any compensation pursuant to paragraphs 2,3 and 4 herein. ASDC also
reserves the right and at its sole discretion to withdraw from this agreement
if there is a determination of fraud or gross negligence on the part of SEAG in
its performance relating to the Project.
7. ASDC agrees to defend, indemnify and hold harmless (including, without
limitations, reasonable attorney fees and expenses) SEAG and SEAG affiliates,
each of the employees, directors, officers, stockholders and agents of SEAG,
and their respective successors, against any and all losses, damages,
deficiencies or liabilities are caused by, resulting or arising from or
otherwise relating to the Project, unless such losses, damages, deficiencies or
liabilities are caused by, resulting or arising from fraud or gross negligence
by SEAG in its performance relating to the Project.
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8. It is agreed that SEAG shall be reimbursed for all of its reasonable
out of pocket expenses with regard to its role as financial advisor in the
financing of the Al Masane Project. If such expenses are expected to exceed US
ten thousand dollars ($10,000) in any given month, an estimate for such month
shall be prepared and presented to ASDC for approval, and prompt approval shall
not be unreasonably denied by ASDC. ASDC will be responsible for reimbursing
SEAG's expenses within five (5) business days following the receipt of such
expenses, SEAG will instruct in writing ASDC as to the banking institution and
appropriate account which the reimbursement should be deposited.
9. The duly authorized parties designated below hereby signify their
agreement with the terms and conditions contained herein through execution of
this letter of agreement by signing as indicated below,
Carlyle SEAG
By: /s/ AMB. ALTON G. KEEL JR.
Name: Amb. Alton G. Keel Jr.
Title: Chairman
Arabian Shield Development Company
By: /s/ HATEM EL-KHALIDI
Name: Hatem El-Khalidi
Title: President