FEE AGREEMENT
This
FEE
AGREEMENT
(the
"Agreement"),
dated
as of November 30, 2007, is made by and between NATIONAL
INVESTMENT MANAGERS INC.,
a
Florida corporation (the "Company")
and
the Investors
(as defined therein) party thereto (as used herein, each a “Holder”
and
collectively, the “Holders”).
In
connection with the entering into of that certain Securities Purchase and Loan
Agreement (the “Purchase and Loan Agreement”),
dated
as of the date hereof, among the Company and the Holders, the Company hereby
agrees to pay to the Holders, and/or their assignees pursuant to Section 1
hereof, a fee (the "Fee"),
the
terms and conditions of which shall be governed by this Agreement. The Holders
shall have all the rights, and be entitled to all of the benefits and subject
to
all of the obligations under the Purchase and Loan Agreement with respect to
such Fee, as well as the rights, benefits and obligations of a Holder hereunder.
Capitalized terms not defined herein shall have the meaning given such terms
in
the Purchase and Loan Agreement.
SECTION
1. FEE.
1.1. Right to Payment.
At any
time after the earlier of (i) the Maturity Date and (ii) the date of
consummation of a Capital Transaction, or on such earlier date as may be
determined under Section 10.2(b) or 11.7 of the Purchase and Loan Agreement,
the
Majority Holders may, by notice to the Company (a “Notice”),
demand payment of the Fee, determined as provided herein. Except to the extent
prohibited by applicable law, the Company will provide the Holders (on a
confidential basis) upon request, at any time on or after the date of delivery
of a notice of a Capital Transaction as provided in Section 11.7 of the Purchase
and Loan Agreement, all information that may be material to the decision to
request the Fee hereunder, including, without limitation, any plans or proposals
for any Qualified Public Offering, any mergers of, sales of assets by,
acquisitions of or by the Company or any of its Subsidiaries, and substantial
sales of any equity by the Company’s stockholders. The Fee shall be a dollar
amount equal to the Fee Amount determined in accordance with Section 1.3
hereof.
1.2. Fee;
Payment.
Payment
of the Fee shall take place (i) not more than 90 days after the date that a
Notice is received by the Company as the Company shall specify by notice to
the
Holders, or at such other time as the Repurchase Price has been determined
in
accordance with and as described in the Purchase and Loan Agreement, or (ii)
at
such other time and place upon which the Holders entitled to payment of the
Fee
and the Company may agree (the "Payment Closing Date").
At
the closing under this Section 1.2, the Company shall pay to the Holders the
Fee
Amount in cash pro rata in accordance with the percentages set forth on
Schedule
1
hereto.
1.3. Fee Amount.
The
aggregate amount to be paid to the Holders pursuant to Section 1.1 hereof (the
“Fee
Amount”)
shall
be an amount (which amount shall not be less than zero) equal to the Preliminary
Fee Amount (as defined below) multiplied
by
1.42.
For purposes hereof, the “Preliminary
Fee Amount”
shall
be an amount equal to (a) the product of (i) the Applicable Percentage
multiplied
by
(ii) the
Equity Value, less
(b) the
Aggregate Exercise Price, less
(c) the
difference between (A) the product of (x) the Repurchase Price per Warrant
Share
(determined in accordance with and as provided in the Purchase and Loan
Agreement) multiplied
by
(y) the
number of shares of Common Stock issuable upon the exercise of the then
Exercisable Warrants, and (B) the Aggregate Exercise Price. An example of
determination of the Fee Amount is set forth for illustrative purposes on
Schedule
2
hereto.
For
purposes of this Section 1.3, the following terms shall have the following
meanings:
“Aggregate
Exercise Price”
means
the aggregate Exercise Price (as defined in the applicable Warrants and
determined as of the date of the Notice) payable upon exercise of the
Exercisable Warrants.
“Applicable
Percentage”
means
the percentage of the Company’s shares of Common Stock (calculated by assuming
the exercise of all then outstanding options, warrants and convertible
securities) issued or issuable upon exercise of the Exercisable Warrants,
determined as of the date of the Notice.
“Equity
Value”
means
the sum of (i) the product of (x) the Repurchase Price per Warrant Share
(calculated in accordance with the Purchase and Loan Agreement) multiplied
by
(y) the
number of shares of Common Stock outstanding on a Fully-Diluted Basis as of
the
date of the Notice and (ii) the aggregate liquidation preference (including
all
accrued and unpaid dividends thereon and any accrued and unpaid fees relating
thereto) attributable to shares of the Company’s outstanding preferred stock
which are not deemed to be converted for purposes of calculating outstanding
shares on a Fully-Diluted Basis.
“Exercisable
Warrants”
means
those Warrants with a current Exercise Price which is less than the Repurchase
Price, determined as of the date of the Notice.
1.4. Additional
Payments Subsequent Upon Capital Transactions.
If at
any time within six (6) months after any Payment Closing Date with respect
to
any payment of the Fee, a Capital Transaction occurs, or the Company or any
of
its Subsidiaries enter into any agreement or letter of intent contemplating
a
Capital Transaction, the Company shall, simultaneously with the consummation
of
any Capital Transaction or at such later time as any payment described below
is
received by the Company or its stockholders, make an additional payment to
the
Holder of an amount (with respect to which a payment of the Fee had been made)
equal to the excess, if any, of (a) the value of the cash, securities and other
property that the Holder would have received if the Fee had not been paid to
such Holder at such Payment Closing Date and the Holder had instead been paid
the Fee at the time of the Capital Transaction or such later time as any
payments received by the stockholders of the Company in connection with such
Capital Transaction or transaction contemplated hereby occurs in an amount
equal
to that calculated pursuant to Section 1.3 over (b) the payment received by
the
Holder on such Payment Closing Date pursuant to Section 1.2 hereof. Each payment
to such Holder pursuant to this Section 1.4 shall be made in cash.
-2-
1.5. Payment.
In
the
event that any portion of the Fee Amount is not paid in connection with a demand
for the Fee pursuant to a Notice, the Holders shall retain all of their rights
hereunder, as to that portion of the Fee Amount not paid; provided that
the
Majority Holders shall be entitled to rescind their Notice with respect to
all
or a portion of such unpaid Fee Amount by notice to the Company (a “Rescission Notice”).
Interest on any unpaid portion of the Fee Amount shall accrue from the date
that
is 90 days after the date on which the Company receives the Notice until the
date that is the earlier of the date that (i) such unpaid Fee Amount, and all
interest accrued thereon, has been paid, in full and (ii) the Company receives
a
Rescission Notice with respect to such unpaid Fee Amount, at the rate of 18%
per
annum, compounded on a quarterly basis to the extent permitted by law and
payable on demand.
1.6. Limitations
on Ability to Pay.
The
Company hereby agrees that it shall not enter into any document, instrument
or
agreement, other than the Intercreditor Agreement and the Senior Documents,
which would in any manner restrict the Company's ability to pay to the Holders
the Fee Amount when due and payable.
1.7.
Repurchase
Price.
For
purposes of this Section 1, and the calculation of any amounts payable
hereunder, it shall not be relevant whether the provisions of Section 11 of
the
Purchase and Loan Agreement have become effective in accordance with the terms
thereof (including for purposes of determining the Repurchase Price thereunder),
and all calculations described in this Section 1 shall be made as if those
provisions were in full force and effect on and after the date
hereof.
SECTION
2. NOTICES.
Any
notice pursuant to this Agreement to the Company, or any Holder shall be in
writing and shall be deemed to have been properly delivered if either personally
delivered or sent by facsimile, overnight courier or mailed certified or
registered mail, return receipt requested, postage prepaid, when addressed
to
them at their respective addresses for notices set forth in the Purchase and
Loan Agreement (or such other address as any of them may designate by written
notice to the others, in accordance herewith), or if all or part of the Fee
has
been transferred to any other Holder, to such other Holder at the address
provided by such Holder in the transfer notice. Any such notice shall be
effective (a) if delivered personally or by facsimile, when received, (b) if
sent by overnight courier, when receipted for, and (c) if mailed as described
above, five (5) days after being so mailed.
SECTION
3. RESTRICTIONS
ON TRANSFER.
A
Holder’s interest in the Fee shall be transferable, in whole or in part, by the
Holder to any Person; provided that
no
Holder shall transfer its interest in the Fee in violation of any applicable
laws or regulations.
SECTION
4. CONSENT
TO JURISDICTION.
THE
COMPANY HEREBY AGREES TO SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURTS
IN
AND OF THE COMMONWEALTH OF MASSACHUSETTS OVER ANY SUIT, ACTION OR PROCEEDING
EXISTING UNDER OR RELATING TO THIS AGREEMENT, THE SECURITIES OR ANY OF THE
OTHER
FINANCING AGREEMENTS, AND CONSENTS THAT SERVICE OF PROCESS WITH RESPECT TO
ALL
COURTS IN AND OF THE COMMONWEALTH OF MASSACHUSETTS MAY BE MADE BY REGISTERED
MAIL TO IT AT ITS ADDRESS DETERMINED PURSUANT TO SECTION 2
HEREOF.
-3-
SECTION
5. MISCELLANEOUS.
This
Agreement and the other Related Agreements set forth the entire understanding
of
the parties hereto with respect to the transactions contemplated hereby and
supersede any prior written or oral understandings with respect thereto. The
invalidity or unenforceability of any term or provision hereof shall not affect
the validity or enforceability of any other term or provision hereof. The
headings in this Agreement are for convenience of reference only and shall
not
alter or otherwise affect the meaning hereof. THIS
AGREEMENT IS INTENDED TO TAKE EFFECT AS A SEALED INSTRUMENT AND MAY BE EXECUTED
IN ANY NUMBER OF COUNTERPARTS WHICH TOGETHER SHALL CONSTITUTE ONE INSTRUMENT
AND
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE DOMESTIC SUBSTANTIVE
LAWS OF THE COMMONWEALTH OF MASSACHUSETTS WITHOUT GIVING EFFECT TO ANY CHOICE
OR
CONFLICT OF LAW PROVISION OR RULE THAT WOULD CAUSE THE APPLICATION OF THE
DOMESTIC SUBSTANTIVE LAWS OF ANY OTHER STATE, AND SHALL BIND AND INURE TO THE
BENEFIT OF THE PARTIES HERETO AND THEIR RESPECTIVE SUCCESSORS AND
ASSIGNS.
SECTION
6. SECURITY.
This
Agreement is, as further described in Section 3.6 of the Purchase and Loan
Agreement, secured by the Collateral pledged pursuant to the Security Documents.
The Holder is entitled to enforce the provisions of the Purchase and Loan
Agreement and to enjoy the benefits thereof, and of the Security Documents
and
other Financing Agreements, and may exercise the respective remedies provided
for hereby and thereby or otherwise available in respect hereof and thereof,
all
in accordance with the respective terms thereof.
SECTION
7. SUBORDINATION.
PAYMENTS
MADE PURSUANT TO THIS AGREEMENT AND OTHER AMOUNTS RELATING TO THIS AGREEMENT
HAVE BEEN SUBORDINATED TO PRIOR PAYMENT OF THE SENIOR DEBT IN THE MANNER, AND
TO
THE EXTENT, SET FORTH IN THE INTERCREDITOR AGREEMENT.
-4-
IN
WITNESS WHEREOF,
the
parties have caused this Agreement to be duly executed, as of November __,
2007.
|
By:
|
/s/Xxxxxx
Xxxx
|
|
Name:Xxxxxx
Xxxx
|
|
|
Title:
CEO
|
|
|
WOODSIDE
CAPITAL PARTNERS IV, LLC,
as
a Holder
|
|
|
By:
|
Woodside
Opportunity Partners, LLC, its Manager
|
|
By:
|
Woodside
Capital Management, LLC, its Manager
|
|
By:
|
/s/Xxxxxx
Xxxxx
|
|
Name:
Xxxxxx
Xxxxx
|
|
|
Title:
Executive
Vice President
|
|
|
WOODSIDE
CAPITAL PARTNERS IV QP,
LLC,
as a Holder
|
|
|
By:
|
Woodside
Opportunity Partners, LLC, its Manager
|
|
By:
|
Woodside
Capital Management, LLC, its Manager
|
|
By:
|
/s/Xxxxxx
Xxxxx
|
|
Name:
Xxxxxx
Xxxxx
|
|
|
Title:
Executive
Vice President
|
|
|
XXXXXX
COMMERCIAL PAPER INC., as
a
Holder
|
|
|
By:
|
/s/Xxxxxx
Xxxxx
|
|
|
Name:
Xxxxxx Xxxxx
|
|
|
Title:
Chief Credit Officer
|
-5-
|
WOODSIDE
AGENCY SERVICES, LLC, as
Collateral
Agent
|
|
|
By:
|
Woodside
Capital Management, LLC, its Manager
|
|
By:
|
/s/Xxxxxx
Xxxxx
|
|
Name:
Xxxxxx
Xxxxx
|
|
|
Title:
Executive
Vice President
|
|
-6-
Schedule
1
Fee
Percentages
|
Holder
|
Percentage
|
|||
|
Woodside
Capital Partners IV, LLC
|
22.8
|
%
|
||
|
Woodside
Capital Partners IV QP, LLC
|
27.2
|
%
|
||
|
Xxxxxx
Commercial Paper Inc.
|
50.0
|
%
|
||
-7-
Schedule
2
Example
of Calculation of Fee Amount
Assumptions:
| i. |
Company
sold for $55,000,000, net of any assumed
debt
|
| ii. |
Total
outstanding shares as of sale
35,539,020
|
| iii. |
Fully
Diluted Shares:
61,203,138
|
| iv. |
Fully
Diluted Shares assuming Preferreds Convert:
95,713,146
|
| v. |
$.50
Warrant with right to acquire 5,742,789
shares
|
| vi. |
$1.00
Warrant with right to acquire
3,828,526shares
|
| vii. |
$1.50
Warrant with right to acquire 1,914,263
shares
|
| viii. |
Preferred
Shares do not convert given higher liquidation preference than conversion
value.
|
| ix. |
Liquidation
Preference: $34,510,008
|
| x. |
Accrued
and unpaid dividends and Fees on preferred shares equal
$3,000,000
|
| xi. |
Only
Exercisable Warrants are the .50
Warrant.
|
| xii. |
Aggregate
Exercise Price equals
$2,871,394
|
| xiii. |
Aggregate
consideration to be paid to the Company upon the exercise of all
then
exercisable outstanding warrants, options or convertible securities
:
$18,137,524
|
Calculation
of definitions
Applicable
Percentage: 5,742,789 divided by 95,713,146 equals 6%
Repurchase
Price per Warrant Share: ($55,000,000 - $34,510,008 - $3,000,000 + $18,137,524)/
61,203,138= $.582 / share
Equity
Value: $.582* 61,203,138 + $34,510,008 + $3,000,000 =
$73,137,524
Preliminary
Fee Amount : (6% * $73,137,524) - $2,871,394 - ($.582 * 5,742,789 -
$2,871,394) = $1,045,264.40
Fee
Amount: $1,045,264.40* 1.42 = 1,484,275.45
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