CORPORATE FINANCE
Oceana
Partners
CORPORATE
FINANCE
Exhibit 10.24
June
23,
2006
Xx.
Xxxx
Xxxxxxxx
Chief
Executive Officer
Cyberdefender
Corporation
00000
Xxxxxxxx Xxxx., Xxxxx 000
Xxx
Xxxxxxx, XX 00000
Dear
Xxxx,
This
engagement letter shall be effective June 28, 2006 and shall serve as an
agreement (the “Agreement”) between Oceana Partners LLC (“Oceana” or the
“Advisor”) and Cyberdefender
Corporation
(the
“Company”) under which Oceana is retained as the Company’s placement agent in
connection with the Company’s private placement of between $3.5 and $4.5 million
of convertible debt and warrants to accredited and institutional investors,
as
described in the Term Sheet dated June 23, 2006, attached hereto as Attachment
A
(the “Financing”). In connection therewith, the parties hereto agree as
follows:
1.
Information
and Coordination.
The
Company will supply Oceana with all current publicly disclosed information
respecting the Company’s business prospects and operations (the “Information”).
The Company recognizes and confirms that Oceana (a) will use and rely primarily
on the Information in performing the services contemplated by this Agreement
without having independently verified the same, (b) does not assume
responsibility for the accuracy or completeness of the Information and (c)
will
not make an appraisal of any assets of the Company or any prospective investors
or purchaser of the Financing. To the best of the Company’s knowledge, the
Information to be furnished by the Company, when delivered, will be true
and
correct in all material respects and will not contain any material misstatement
of fact or omit to state any material fact necessary to make the statements
contained therein not misleading. The Company shall make available to Oceana
and/or shall agree to have professionally prepared at the Company’s expense, all
financial statements, marketing materials, subscription documents and other
information which in Oceana’s reasonable judgment shall be necessary or
appropriate. The Company will promptly notify Oceana if it learns of any
material inaccuracy or misstatement in or material omission from, any
Information theretofore delivered to Oceana. Advisor will coordinate its
activities with the Company regarding the marketing of the securities to
investors during the term of this Agreement, as herein defined. The Company
will
make senior management reasonably available for meetings with prospective
investors.
2.
Exclusive
Engagement.
During
the Term, as below defined, Advisor shall serve as the exclusive advisor
to the
Company for purposes of the Financing. Nothing herein shall preclude Advisor
from engaging sub-advisors to assist Advisor in the performance
Oceana
Partners LLC
000
Xxxxxxx Xxxxxx, Xxxxx 0000
Xxx
Xxxx,
Xxx Xxxx 00000
Phone
(000) 000-0000 Fax (000) 000-0000
Oceana
Partners
CORPORATE
FINANCE
of
these
activities. In such case, sub-advisors shall be compensated for their services
from such portion of the compensation described under Section 4 hereof as
Advisor shall determine in its sole discretion. Advisor shall assist the
Company
in structuring and placing securities of the Company as the Company may require
during the Term. It is specifically recognized that Wedbush Xxxxxx Securities,
Inc had previously been retained by the Company, which engagement was recently
terminated by the Company. To the extent Wedbush is entitled to any fees,
those
fees shall be separate from the fees contemplated herein and shall not exceed
a
cash commission of 1% of the gross proceeds raised in the Financing from
entities previously contacted by Wedbush. Wedbush shall co-operate with the
Company and Oceana in connection herewith.
3.
Term.
This
Agreement shall become effective on the execution date hereof and, unless
previously terminated pursuant to Paragraph 10 below, shall continue in effect
until the Financing is consummated or is terminated (the "Termination Date").
The period from the date hereof until the Termination Date is hereafter referred
to as the “Term.”
4.
Compensation.
|
a.)
|
On
each date during the Term on which any equity
or equity linked (i.e. convertible debt) securities are
issued (including any bridge financing) and cash is received by
the
Company (each such date a "Closing Date"), the Company shall pay
to Oceana
or its designee, in cash, a commission equal to seven percent (7%)
of the
gross purchase price for the equity securities. In addition, the
Company
shall issue to Oceana, or its designee, common stock purchase warrants
(the "Warrants") to purchase seven percent (7%) of the aggregate
stock
issued on the Closing Date or Closing Dates at an exercise price
per
Warrant equal to the price of the common stock on such Closing
Date. In
the event convertible debt is placed, the Company shall also issue
to
Oceana, or its designee, common stock purchase warrants (the "Warrants")
to purchase seven percent (7%) of the aggregate equity securities
issuable
upon conversion of the debt securities at an exercise price per
Warrant
equal to the conversion price per security on such Closing Date.
If
different classes of securities are issued in the form of a Unit,
then
Oceana shall be issued a Unit Purchase option equal to seven percent
(7%)
of the aggregate Units issued at an exercise price per Unit equal
to the
price of the Unit on such Closing Date. The Warrants or Units shall
be
exercisable upon issuance, shall expire five years from the Closing
Date,
unless otherwise extended by the Company, and shall have cashless
exercise
provisions. The Warrants or Units shall also have piggyback and
demand
registration rights, anti-dilution and such other similar provisions
identical to the securities sold on the Closing Date.
The Company
|
Oceana
Partners
CORPORATE
FINANCE
shall
have the right to reject in whole or in part any proposed purchaser of the
securities in its sole and absolute discretion.
|
b.)
|
On
each date during the Term on which any straight
debt securities
are issued and cash is received by the Company (each such date
a "Closing
Date"), the Company shall pay to Oceana or its designee, in cash,
a
commission equal to four percent (4%) of the gross purchase price
for the
debt securities. If warrants are attached to the debt securities,
then
separate Warrants shall be issued to Oceana equal to seven percent
(7%) of
the warrants issued. The Warrants shall be exercisable upon issuance,
shall expire five years from the Closing Date, unless otherwise
extended
by the Company, and shall have cashless exercise provisions. The
Warrants
shall also have piggyback and demand registration rights, anti-dilution
and such other similar provisions identical to the securities issuable
upon conversion of the convertible debt sold on the Closing
Date.
The Company shall have the right to reject in whole or in part
any
proposed purchaser of the debt securities in its sole and absolute
discretion.
|
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c.)
|
This
agreement shall act as irrevocable payment authorization instructions
authorizing wire payment of the cash portion of any fee directly
to Oceana
on the Closing Date.
|
5.
Retainer
Fee.
In
consideration for structuring the Financing, Oceana shall be issued shares
of
common stock equal to 2% of total shares outstanding immediately prior to
closing the Financing. The shares shall have the same registration rights
as the
securities described in paragraph 4(a) above. No retainer shall be payable
in
the event the Financing does not close.
6.
Expenses.
Oceana
will be promptly reimbursed by the Company for all reasonable and authorized
out-of-pocket expenses incurred in connection with its activities hereunder.
These expenses may include, but are not limited to, travel
and lodging expenses, due diligence and investor meetings and events, expenses
to print documents for the Company, and postal expenses incurred for mailing
documents, such as materials to investors, for the Company. Oceana shall
not
incur any expenses or series of related expenses, subject to reimbursement
by
the Company hereunder, which are in excess of $250, without obtaining the
Company’s prior written approval.
7.
Indemnification.
To the
extent the Advisor becomes involved in any capacity in any action, claim,
proceeding or investigation brought or threatened by any person, including
the
Company’s stockholders, related to or arising out of or in connection with this
Agreement, the Company will promptly reimburse the Advisor for reasonable
legal
and other expenses as and when they are incurred in connection therewith.
The
Company will indemnify and hold the Advisor harmless from and against any
losses, claims,
Oceana
Partners
CORPORATE
FINANCE
damages,
liabilities or expense to which the Advisor may become subject under any
applicable Federal or state law, or otherwise, related to, arising out of
or in
connection with this Agreement, whether or not any pending or threatened
action,
claim, proceeding, or investigation giving rise to or on the Advisor’s behalf
and whether or not in connection with any action, proceeding or investigation
in
which the Advisor is a party, except as to that portion of any such loss,
claim,
damage, liability or expense which is found by a court of competent jurisdiction
in a judgment which has become final, in that it is no longer subject to
appeal
or review, to have resulted from the Advisor’s bad faith or gross negligence.
The Advisor agrees to promptly notify the Company of any action, claim,
proceeding or investigation with regard to which the Company may be liable
for
indemnification pursuant to the terms of this Agreement. Neither the termination
of this Agreement nor the completion of the services provided hereunder shall
affect these indemnification provisions which shall remain operative and
in full
force and effect.
8.
Arbitration.
Any
dispute between the Company and Oceana shall be subject to binding arbitration
before a New York City based panel of one arbitrator in accordance with the
rules of the American Arbitration Association. Prior to the selection of
the
arbitrator of the binding arbitration, the parties shall first attempt
non-binding mediation before a mediator selected by said Association. In
the
event the mediator makes a determination and only one of the parties refuses
to
accept said determination, then the refusing party shall be responsible for
all
arbitration and attorney’s fees of the other party should the refusing party
receive a less favorable result from the binding arbitration, subject however
to
the discretion of the arbitrators to reallocate these costs if cause is so
found
by the arbitrators.
9.
Amendments This
Agreement may only be varied by written agreement between the Advisor and
the
Company. All such variations shall only be effective when in writing, signed
by
the duly authorized representatives of both parties.
10.
Termination Subject
to Paragraphs 4, 6, 7 and 11, the provision of services hereunder may be
terminated prior to the Termination Date by the Company and/or the Advisor
by
giving written notice to the other party in the following events:
-
force majeure, defined
as a situation which, in the opinion of either party, creates any change
or
development in existing laws and regulations or in local or international
financial, political, military, economic or market conditions or currency
exchange rate which is likely to render impossible the Offering;
-
breach
of any commitments hereunder by Advisor (which is not remedied within 14
days
after written notification to such effect);
In
the
event that the Agreement is terminated prior to the Termination Date, the
Company will forthwith pay the Advisor those of its expenses and fees incurred
or owing up to the Termination Date.
Oceana
Partners
CORPORATE
FINANCE
11.
Tail.
Within
20 business days of the Termination Date, the Advisor shall deliver to the
Company a list identifying all investors that Oceana and any of its sub-advisors
had solicited in connection herewith. In the event the Company thereafter
receives funding from any Oceana Investor or an affiliate thereof, within
270
days of the Termination Date (the “Tail Period”), then the Company shall pay the
Advisor the fee as described in paragraph 4 (the “Tail Fee”). The Tail Fee shall
apply to any Oceana Investors, including their affiliates, and to any third
party investor introduced to the Company by Oceana Investors or affiliates
thereof assuming such third party investor was not previously in discussions
with the Company before such introduction.
12.
Notices.
Notices
shall be served to the address/fax number of each party set out in this letter
(or such other address as any of the parties may notify to the other in writing
from time to time). Such notice shall be deemed to be duly given or made
when it
shall have been delivered by registered mail, courier or fax, which shall
be
confirmed by registered mail or courier, to the party to which it is required
to
be given or made.
Contact
Addresses:
Oceana
Partners LLC:
Xx.
Xxxxxxxxxx X. Xxxxxx
Oceana
Partners LLC
000
Xxxxxxx Xxxxxx, Xxxxx 0000
Xxx
Xxxx,
XX 00000
Tel:
000
000-0000
Fax:
000
000-0000
Cyberdefender
Corporation
Xx.
Xxxx
Xxxxxxxx
Chief
Executive Officer
Cyberdefender
Corporation
00000
Xxxxxxxx Xxxx., Xxxxx 000
Xxx
Xxxxxxx, XX 00000
Tel:
(000) 000-0000 x 000
Fax:
(000) 000-0000
13.
Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws
of New
York.
14.
Miscellaneous.
This
Agreement sets forth the understanding of the parties relating to the subject
matter hereof, and supersedes and cancels any prior communications,
understandings and agreements between the parties with respect to the subject
matter hereof. This Agreement cannot be modified or changed, nor can any
of its
provisions be waived, except in writing when signed by both parties.
If
the
foregoing meets with your understanding, kindly acknowledge your acceptance
at
the place indicated on this letter and on the enclosed copy of this letter.
Please return one of the executed letters to me and keep one for your
files.
Oceana
Partners
CORPORATE
FINANCE
Sincerely,
Oceana
Partners LLC
____________________________
Xxxxxxxxxx
X. Xxxxxx
Senior
Managing Director
ACCEPTED
AND AGREED TO BY:
Cyberdefender
Corporation
______________________
Xxxx
Xxxxxxxx
Chief
Executive Officer
Oceana
Partners
CORPORATE
FINANCE
ATTACHMENT
A
Terms
of Offering
