ADVISORY SERVICES AGREEMENT
Exhibit
10.14
This
ADVISORY SERVICES AGREEMENT (this "Agreement") is
entered into as of June 27, 2008, by and among microHelix, Inc. an
Oregon Corporation (the "Company"), and
Aequitas Capital Management, Inc., an Oregon corporation ("Aequitas").
Background
Aequitas
has staff skilled in strategy development, strategic planning, marketing,
corporate development and other advisory skills and services. An
affiliate of Aequitas has consummated an investment in the Company on or about
the date hereof. The Company will require Aequitas' special skills
and advisory services in connection with its general business operations, and
Aequitas is willing to provide such skills and services to the Company, all upon
the terms and conditions set forth in this Agreement.
Agreement
NOW,
THEREFORE, in consideration of the mutual promises contained herein, the parties
hereto, intending to be legally bound, do hereby agree as follows:
1. Engagement. Upon
the terms and conditions herein set forth, the Company hereby engages Aequitas
for the Term (as defined below) to provide advisory services to the Company as
requested from time to time by the Company in consideration for the compensation
provided for in Section 3
below. These services will be in connection with strategy
development, strategic planning, marketing, corporate development and such other
advisory services as the Company reasonably requests from time to time, and
shall be performed under the direction of the Company's Board of
Directors. In consideration of the remuneration herein specified,
Aequitas accepts such engagement and agrees to perform the services specified
herein.
2. Term. This Agreement
shall commence on the date hereof and shall terminate (except as provided in
Section 6(h)) on the
earliest to occur of (a) a Sale Transaction (defined below), (b) an initial
Public Offering (defined below), (c) termination by Aequitas upon 30 days
written notice to the Company, (d) the date that Aequitas or an affiliate of
Aequitas ceases to have a debt or equity investment in the Company, (e) the
fifth anniversary of the date hereof (the "Term"), or
(f) termination by the Company upon six months' written notice to Aequitas;
provided, however, that if no
Sale Transaction or initial Public Offering has been consummated prior to the
fifth anniversary of the date hereof, the Term shall be automatically extended
thereafter on a year to year basis unless either party provides written notice
to the other of its desire to terminate this Agreement at least 30 days prior to
the expiration of the Term or any extension thereof. "Sale Transaction"
means (i) the sale (in one or a series of related transactions) of all or
substantially all of the Company's assets to a Person (defined below) or a group
of Persons acting in concert, (ii) the sale or transfer (in one or a series of
related transactions) of a majority of the outstanding capital stock of the
Company, to one Person or a group of Persons acting in concert, or (iii) the
merger or consolidation of the Company with or into another Person that is not
an affiliate of the Company, in each case in clauses (ii) and (iii) above
under circumstances in which the holders of a majority in voting power of the
outstanding capital stock of the Company immediately prior to such transaction
(excluding any Person or group of persons acting in concert who are acquiring
the Company) own less than a majority in voting power of the outstanding capital
stock of the Company, or voting equity securities of the surviving or resulting
corporation or acquirer, as the case may be, immediately following such
transaction. A sale (or multiple related sales) of assets including,
without limitation, one or more subsidiaries (whether by way of merger,
consolidation, reorganization or sale of all or substantially all assets or
securities) which constitutes all or substantially all of the assets of the
Company shall be deemed a Sale Transaction. "Person" shall be
construed in the broadest sense and means and includes, without limitation, a
natural person, a partnership, a corporation, an association, a joint stock
company, a limited liability company, a trust, a joint venture, an
unincorporated organization and any other entity. "Public Offering"
means an offering of equity securities of the Company or any subsidiary (or any
successor-in-interest of the foregoing) listed on a nationally recognized
exchange or quoted on The Nasdaq Stock Market that is made pursuant to an
effective registration statement under the Securities Act of 1933, as
amended.
3. Advisory Fee; Success
Fee.
(a) In
partial consideration of Aequitas' undertaking to provide the advisory services
hereunder, the Company shall pay Aequitas a monthly advisory fee of $10,000 (the
"Advisory Fee")
and the Warrant (as noted below). The Advisory Fee shall be payable
by the Company whether or not the Company actually requests that Aequitas
provide any management advisory services. The Advisory Fee shall be
paid monthly, in advance, for each full or partial month of service on the first
business day of each calendar month, effective beginning April 1,
2008. If requested by Aequitas, Advisory Fee payments shall be made
by an Automated Clearing House ("ACH") transfer from the Company's checking
account.
(b) In
partial consideration and as an incentive to Aequitas, Borrower shall grant to
Aequitas a warrant entitling Aequitas to purchase 1,066,667 shares of Company's
Common Stock at an exercise price of $0.001 per share (the "Warrant"). The
Warrant will have customary anti-dilution provisions, weighted average
anti-dilution price protection, will provide for a cashless exercise option and
shall contain standard piggyback registration rights provisions (all the above
provisions shall be equal to that of the senior bridge note recently presented
to Company). The Warrant shall be exercisable in whole or in part
anytime for up 60 months after the date of this Agreement.
(c) Notwithstanding
anything to the contrary contained herein, the Company shall accrue but not pay
the Advisory Fee if and for so long as (i) any such payment would
constitute a default (or any event which might, with the lapse of time or the
giving of notice or both, constitute a default) under the Company's financing
agreements (a "Default "); provided, however, that the Company shall be
obligated to pay any accrued Advisory Fees deferred under this Section 3(c) to the
extent that such payment would not constitute a Default or (ii) Aequitas
instructs the Company not to pay all or any portion of the Advisory Fee during
any calendar month. Interest will accrue on all due and unpaid
Advisory Fees not paid pursuant to clause (i) of the preceding sentence at
the Default Rate until such Advisory Fees are paid, and such interest shall
compound annually. The "Default Rate" shall be 18.0% per
annum.
(d) In
addition to the Advisory Fee, the Company shall reimburse Aequitas promptly upon
request for all reasonable out-of-pocket expenses incurred by Aequitas in
connection with Aequitas' obligations hereunder, including without limitation
the fees and expenses paid to consultants, subcontractors and other third
parties in connection with such obligations, a monthly telephone charge of $50
and a monthly administrative charge of 15% of the out-of-pocket costs and
expenses incurred.
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(d) In
addition to the foregoing, the Company shall pay Aequitas a Success Fee as
described in Exhibit A
attached hereto.
(e) On
or before the expiration of the Term of this Agreement (the "Expiration Date"),
the Company will pay Aequitas for any unpaid fees due through the Expiration
Date.
4. Additional Rights and
Obligations of the Parties.
(a) During
the Term, Aequitas shall maintain in its employ, or otherwise have available to
it, personnel in its judgment sufficient in number and adequate in ability to
perform all services that Aequitas is required to perform under this
Agreement.
(b) The
Company shall at all times cooperate with Aequitas and keep Aequitas fully
informed with regard to the business and significant activities of the Company
and its subsidiaries.
(c) Aequitas
shall diligently and faithfully perform its obligations under this Agreement,
but Aequitas shall not be responsible for any loss incurred by the Company or
any of its subsidiaries as a result of any advice or recommendations of
Aequitas.
5. Indemnification.
(a) Indemnification. The
Company agrees to indemnify and hold harmless Aequitas (including its affiliates
and its and their respective principals, officers, directors, shareholders,
partners, members, managers and employees) from and against, and pay or
reimburse Aequitas and such other indemnified persons for, any and all actions,
claims, demands, proceedings, investigations, inquiries, liabilities,
obligations, fines, deficiencies, costs, expenses, royalties, losses and damages
(whether or not resulting from third party claims) related to or arising out of
the execution, delivery or existence of this Agreement or the performance by
Aequitas of services under this Agreement, and to reimburse Aequitas and any
other indemnified person for out-of-pocket expenses and reasonable legal and
accounting expenses incurred by it in connection with or relating to
investigating, preparing to defend, defending, asserting or prosecuting any
actions, claims or other proceedings (including any investigation or inquiry)
arising in any manner out of or in connection with the execution, delivery or
existence of this Agreement or Aequitas' performance of services hereunder
(whether or not such indemnified person is a named party in such proceeding);
provided, however, that the
Company shall not be responsible under this Section 5(a) for any claims,
liabilities, losses, damages or expenses to the extent that they are finally
judicially determined (without right of further appeal) to result from actions
taken by Aequitas (or by any other indemnified person) due to Aequitas' (or by
any other indemnified person's) gross negligence, willful misconduct, bad faith
or knowing violation of applicable law. The rights to indemnification pursuant
to this Agreement shall be in addition to (but without duplication of) any other
indemnification or other rights in favor of Aequitas or its
affiliates.
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(b) Limitation on
Liability. The Company also agrees that neither Aequitas nor any other
indemnified person shall have any liability (whether direct or indirect, in
contract or tort or otherwise) to the Company for, or in connection with (i) the
retention of Aequitas pursuant to this Agreement or the performance by Aequitas
of its obligations under this Agreement, except to the extent that any such
liability is finally judicially determined (without right of further appeal) to
have resulted from Aequitas' (or such other indemnified person's) gross
negligence or willful misconduct; or (ii) any investment by Aequitas or any of
its affiliates in, or any loan by Aequitas or any of its affiliates to, the
Company or any of its affiliates. Aequitas makes no representations
or warranties, express or implied, in respect of the services to be provided by
Aequitas under this Agreement. The Company further acknowledges that
Aequitas' role under this Agreement is as an advisor only, that Aequitas does
not and will not have or exercise control over the Company's affairs and/or
governance, that Aequitas will have no liability for the actions of its
affiliates in the absence of gross negligence, and that the Company waives any
claims based on assertions that Aequitas exercises control or influence over the
Company's affairs. In no event will Aequitas or any other indemnified
person be liable under this Agreement for any punitive, exemplary, indirect,
special, incidental or consequential damages, including lost profits or savings,
whether or not such damages are foreseeable, or in respect of any liabilities
relating to any third party claims (whether based in contract, tort or
otherwise).
(c) Contribution. If
and to the extent that the indemnification provided for in Section 5(a) is not
enforceable for any reason, the Company agrees to make the maximum contribution
possible pursuant to applicable law to the payment and satisfaction of any
actions, claims, liabilities, losses and damages incurred by Aequitas or the
other indemnified persons for which they would have otherwise been entitled to
be indemnified hereunder.
6. Miscellaneous.
(a) Marketing
Authorization. The Company agrees that Aequitas may use the
Company's name and logo, and general information concerning the Company's
relationship with Aequitas, on the Aequitas website and in Aequitas firm
brochures (typically in a form commonly known as "tombstones"), in press
releases, advertisements, and in other related marketing materials. This
authorization will extend to reissues of the advertisements and other marketing
tools which Aequitas may utilize in its marketing activities. The
Company may notify Aequitas in writing at any time to stop further use of
references to Company in Aequitas marketing materials.
(b) Notices. All notices,
demands and other communications given or delivered under this Agreement shall
be in writing and shall be deemed to have been given (i) when personally
delivered, (ii) 3 business days after being mailed by first class mail,
certified with return receipt requested, or (iii) 1 business day after delivery
to a reputable overnight courier for next business day delivery, to the
following addresses (or such other address as is specified in
writing):
Aequitas
Capital Management, Inc.
0000
Xxxxxxx Xxxx, Xxxxx 000
Xxxx
Xxxxxx, XX 00000
Attn: Legal
Department
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Attn: Xxxxx
X. Xxxxxxxx, President and CFO
microHelix, Inc.
XX Xxx 0000
Xxxxxxxx, Xxxxxx 00000
(c) Entire Agreement; Amendment
and Modification. This Agreement constitutes the entire agreement between
the parties with respect to the subject matter hereof, superseding all prior
understandings and agreements whether written or oral. This Agreement
may not be amended or revised except by a writing signed by Aequitas and the
Company.
(d) Successors and
Assigns. This Agreement shall be binding upon and inure to the benefit of
the parties and their respective successors and assigns but may not be assigned
(and no duties may be delegated) by any party without the prior written consent
of the other parties hereto, except that without such written consent Aequitas
may assign this Agreement to any of its affiliates.
(e) Arbitration. Any
claims or controversies relating to this Agreement shall be heard and resolved
by arbitration under the auspices and rules of Arbitration Service of Portland,
Inc. ("ASP") or another mutually acceptable arbitration
service. Venue for arbitration proceedings shall be in Portland,
Oregon. Arbitration shall be before 1 arbitrator, (a) selected by
mutual agreement of the parties reached 15 days after ASP or other arbitration
service has sent confirmation of notice of
filing of the demand for arbitration, or (b) if no mutual agreement can be
reached within that time, appointed by ASP or other arbitration
service. Any such arbitrator shall be an attorney at law who has
practiced law for at least 10 years in either general commercial litigation
or general corporate
and commercial matters. The arbitrator shall not be empowered to
award punitive damages or damages in excess of actual
damages. Depositions may be taken and other discovery may be obtained
during such arbitration proceedings to the same extent authorized in civil
judicial proceedings. Arbitration fees payable to the arbitrator
shall initially be paid equally by the parties; the prevailing party shall be
entitled to recover any fees so paid from the non-prevailing
party. Any award shall be final and legally binding and may be
entered into judgment in any court of competent jurisdiction where a party
maintains assets. Except as required by applicable law, all
arbitration proceedings and any evidence submitted therein (and particularly,
but without limitation, any trade secrets, intellectual property and other
information in which either of the parties has an expectation of privacy) shall
be kept confidential. Notwithstanding the foregoing, no party shall
be prevented from seeking injunctive relief from a court of competent
jurisdiction in order to enforce the terms of this Agreement. In any
action for equitable relief, the parties agree to waive any requirement for the
posting of a bond or security.
(f) Governing Law; Venue.
This Agreement shall be deemed a contract made under the laws of the state of
Oregon and, together with the rights and obligations of the parties hereunder,
will be construed under and governed by the laws of the state of Oregon, without
giving effect to any conflicts of law provisions thereunder. The
parties irrevocably submit to the jurisdiction of any state or federal court
sitting in Multnomah County, Oregon, in any action or proceeding brought to
enforce, or otherwise arising out of or relating to, this Agreement, and hereby
waive any objection to venue in any such court and any claim that such forum is
an inconvenient forum.
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(g) Waiver of Jury Trial;
Attorney Fees. Each party hereby irrevocably waives any right
it may have, and agrees not to request, a jury trial for the adjudication of any
dispute hereunder or in connection herewith or arising out of this Agreement or
any transaction contemplated hereby. In the event suit or action
(including arbitration) is brought by any party under this Agreement to enforce
any of its terms, or in any appeal therefrom, it is agreed that the prevailing
party or parties will be entitled to reasonable attorneys fees to be fixed by
the arbitrator, trial court and/or appellate court.
(h) Survival. Upon
expiration or termination of this Agreement, all liabilities and obligations
hereunder automatically shall terminate except (i) liability for breaches by any
party prior thereto, (ii) the Company's obligations under Section 3 (with respect
to any fees payable or incurred either prior to or at the termination of this
Agreement or following termination), and (iii) the Company's obligations under
Section 5, each of which
shall survive the termination of this Agreement.
(i) Independent
Contractor. The parties acknowledge and agree that Aequitas is
and shall act as an independent contractor of the Company in the performance of
its duties hereunder. Aequitas is not, and in the performance of its
duties will not hold itself out as, an employee, agent or partner of the Company
or any of its subsidiaries.
(i) Counterparts. This
Agreement may be signed and delivered in multiple counterparts (including
delivery by means of facsimile), each of which shall be deemed an original but
which together shall constitute one and the same instrument.
[Signature
Page Follows]
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IN
WITNESS WHEREOF, the parties have duly executed this Advisory Services Agreement
as of the date first above written.
| MICROHELIX, INC.. | |||
|
|
By:
|
/s/ Xxxxx X. Xxxxxxxx | |
| Name: | Xxxxx X. Xxxxxxxx | ||
| Title: | President and CFO | ||
| AEQUITAS CAPITAL MANAGEMENT, INC. | |||
|
|
By:
|
/s/ Xxxx XxxXxxxxxx | |
| Name: | Xxxx XxxXxxxxxx | ||
| Title: | Executive Vice President | ||
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EXHIBIT
A
Success
Fees
1. The
Company shall pay Aequitas a contingent success fee ("Success Fee") based upon
the successful consummation by the Company of each of the following types of
transactions during the term of this Agreement. These Success Fees
shall not apply to any transactions covered under a term sheet provided the
Company by Aequitas relating to an investment by Aequitas or its
affiliates.
|
|
(a)
|
1.50%
of the amount of any secured debt facility commitment (plus any increases
in commitment amount during the 12 months following the initial
transaction) provided to the Company by a lender, including any lender now
providing a debt facility or financing to the
Company.
|
|
|
(b)
|
3.50%
of the amount of any subordinated/mezzanine/private debt facility or
unsecured debt facility commitment (plus any increases in commitment
amount during the 12 months following the initial transaction) from
sources introduced by Aequitas.
|
|
|
(c)
|
5.00%
of the amount of new equity provided to the Company by an investor
introduced to the Company by Aequitas. This fee will be reduced to 2.50%
if the equity is provided by an investor who was contacted directly by the
Company without the assistance of
Aequitas.
|
|
|
(d)
|
5.00%
of the amount of debt cancellation, debt reduction or similar discounts
provided by lenders or creditors of the
Company.
|
|
|
(e)
|
A
percentage of the total purchase price paid or payable by the Company with
respect to an acquisition target acquired by the Company which was
introduced by Aequitas as follows:
|
|
|
·
|
5.00%
of the first $5 million
|
|
|
·
|
4.00%
of the next $5 million
|
|
|
·
|
3.00%
of the next $5 million
|
|
|
·
|
2.50% of
any additional purchase price amount exceeding $15
million
|
|
|
(f)
|
2.50%
of the total purchase price paid or payable by the Company with respect to
an acquisition target acquired by the Company which was not introduced by
Aequitas.
|
|
|
(g)
|
A
mutually agreed fee in the event of a sale of the Company or a substantial
portion of its assets not in the ordinary course of
business.
|
Success
Fees shall be paid in full at the closing of each transaction. If (a) a facility
or financing commitment, or portion thereof, is based on future results of the
Company or achievement of milestones by the Company, or (b) a sale or
acquisition transaction provides for contingent or earnout payments, then the
portion of the Success Fee based on future results, milestone achievement or
contingent or earnout payments (the "Milestone Fee") shall be calculated based
upon pro forma projections developed by the Company and Aequitas. An
amount equal to 50% of the Milestone Fee as so calculated shall be paid at the
closing of the transaction in satisfaction of the Milestone Fee.
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In the
case of an acquisition transaction, the purchase price includes consideration
payable in the form of cash, assets, receivables, securities, promissory notes,
any loans constituting an integral part of the transaction, earnouts,
investments, license or royalty agreements, assumed liabilities, covenants not
to compete, consulting agreements or employment agreements with
owners/shareholders in excess of market, leases or rents payable to
owners/shareholders in excess of market, and any other economic benefits,
rights, property or interests, including payments contingent upon future events
or conditions.
Notwithstanding
anything to the contrary herein, Aequitas shall not be entitled to, and the
Company shall have no obligation to pay, a Success Fee with respect to a
publicly registered offering of the Company's securities.
Upon
request, the Company agrees to execute an authorization for the lender/investor
to pay a Success Fee, and/or any unpaid Aequitas invoice amount, out of the
financing proceeds by direct wire transfer to Aequitas at closing.
2.
Following the Expiration Date, Aequitas will provide the Company with a list
identifying each person it has introduced to the Company, prior to the
Expiration Date, in connection with a proposed transaction described in Section
1 above. Each person so identified shall be an "Aequitas
Contact". Notwithstanding the expiration of the term of this
Agreement, Aequitas will be entitled to a Success Fee as described in Section 1
above (in the same manner that a Success Fee would be due to Aequitas in the
absence of expiration) with respect to any transaction which is consummated by
the Company (a) with an Aequitas Contact during the 24 months following the
Expiration Date, or (b) with any other person during the 12 months following the
Expiration Date if Aequitas provided material assistance in connection with the
transaction.
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