EXHIBIT 10.8
INVESTMENT BANKING AND FINANCIAL ADVISORY AGREEMENT
This Investment Banking and Financial Advisory Agreement (the "Agreement") is
made and entered into as of August 1, 2002, by and among A21, Inc. (OTCBB: ATWO)
having a principal place of business at Xxx Xxxxxxxxxxx Xxxxxx, Xxxxx 000, Xxx
Xxxxxxxxx, XX, 00000 (the "Company"), and vFinance Investments, Inc. ("VFIN"),
affiliated NASD member broker dealer, having a place of business at 0000 Xxxxx
Xxxxxxxx Xxxxx, Xxxxx 000, Xxxx Xxxxx, Xxxxxxx, 00000-0000.
ENGAGEMENT OF SERVICES
The Company hereby retains VFIN, for the purpose of providing to the Company
financial consulting services, investment banking and management consulting
services. VFIN agrees to be retained to provide such services pursuant to the
terms and conditions set forth herein.
SECTION ONE
STATEMENT OF WORK
VFIN will, on behalf of the Company, perform the following services:
Financial Advisory Services. VFIN will provide capital market advice
and will work with the Company's management in creating market
awareness of the Company and its stock, and in the organization and
sponsorship of investor presentations both on an internal and external
retail and institutional basis. VFIN will make a market in the
Company's stock and will seek to establish other market makers in the
Company's stock. VFIN will seek to increase liquidity and maintain an
orderly market in the Company's stock, including assisting the buy-side
and in cross-block trades of the Company's stock. VFIN will provide
advice to the Company pertaining to stock buyback plans, stock splits
or dividends and other related plans as they pertain to the Company's
stock price and liquidity. At the request of the management
("Management") of the Company, VFIN will attend shareholder and Board
Meetings to make presentations. VFIN will work with management of the
Company on a shareholder communication program and other technology
initiatives to assist in facilitating all of these points. VFIN will
also make available all corporate services group personnel to assist
management and employees in areas such as 144 transactions, cashless
option exercises, and all related services that an employee of the
Company may wish to avail themselves of.
Assessment. VFIN will prepare an assessment ("Assessment") of the
Company's current business, operations, strategies and target markets.
The Assessment will highlight market conditions and other contributing
factors that would likely influence the Company's ability to
successfully pursue the current course of business.
Fairness Opinion. VFIN will render Fairness Opinion(s) with respect to
any potential transaction(s) that the Company is currently or might
consider contemplating. Said Fairness Opinion(s) will be organized and
will contain language standard to such documents. Such Fairness
Opinion(s) will be delivered for a fee to be mutually agreed upon prior
to commencement of work by VFIN for each specific transaction.
Information Memorandum. VFIN will work with Management to become
educated in the Company's intended business, operations, strategies and
target markets. VFIN will then, in coordination with Management, assist
in the preparation of an Informational Memorandum ("Memorandum") that
will articulate the business opportunity, the business and financial
models and an investment opportunity. The Memorandum will reflect the
future business of the Company, detail the Company's strategic
position, and define requirements and terms for potential funding(s).
The Memorandum shall describe potential distribution channels, market
potential, marketing strategies, a description of key technologies,
organizational structure and financial projections. Additionally, VFIN
will compose a PowerPoint presentation to be used at investor
presentations.
Mergers/Acquisitions and Investments - VFIN will research market
opportunities, identify potential mergers, acquisitions and investors,
model the transactions, structure the deals, and work with Management
to close said transactions. VFIN will also work with the Company to
provide various scenarios to maximize shareholder value in its
endeavors to joint venture or acquire assets of digital image providers
and help effectuate such. VFIN will provide a sensitivity analysis for
capital raising purposes and stand ready to assist the Company in these
efforts subject to mutual agreement as to valuation and terms. VFIN
will work with the Company and their counsel if asked to skeleton an
offering memorandum and accompanying documents to be used for the
purposes of effectuating a retail capital raise when deemed appropriate
by management of the Company. In particular, VFIN will stand ready to
review and assist the Company in one or more currently contemplated
acquisitions if asked to do so and review the opportunity to raise
capital through its retail investment banking division in a suggested
range of $500,000 to $1,000,000 in gross proceeds.
VFIN will provide in writing the names of parties to whom it intends to
disclose proprietary information and they will be identified and
included as a "VFIN Party" under the Agreement. For the purposes of
this Agreement, a VFIN Party shall be defined as any and all potential
investors to be contacted by VFIN with prior consent by the Company
after the signing of this Agreement, or while this Agreement is in
force.
In the event the Company, Management or its stockholders receive an
inquiry from, or are otherwise in contact with, a party concerning the
availability of the Company regarding a Covered Transaction, as defined
herein below in Section Five, Company will determine in its sole
discretion whether to notify and refer such party to VFIN in order that
VFIN may continue such discussions and that party will be identified
and included as a Client VFIN Party. If VFIN is able to successfully
close a transaction as a result of a Company referral, the fees payable
to VFIN will be reduced by a factor of one-half (1/2).
In the event Company withholds its written approval authorizing VFIN to
approach a VFIN Party, the Company agrees that neither it nor its
agents, will discuss or enter into a Covered Transaction with that
party during the term of this Agreement, as defined in Section Four,
and for a period of twelve (12) months after the termination or
expiration of this Agreement unless said party was previously
introduced to the Company by a party other then VFIN .
Each prospect will be qualified and meetings will be set to present the
Company to potential investors. VFIN will work with Management to
negotiate and close a Covered Transaction.
IN PERFORMING ITS SERVICES HEREIN, VFIN SHALL BE ENTITLED TO RELY WITHOUT
INVESTIGATION UPON ALL INFORMATION THAT IS PROVIDED BY THE COMPANY, WHICH
INFORMATION THE COMPANY HEREBY WARRANTS SHALL BE COMPLETE AND ACCURATE IN ALL
MATERIAL RESPECTS, AND NOT MISLEADING. VFIN IN NO WAY GUARANTEES THAT THE
COMPANY WILL SUCCESSFULLY RAISE CAPITAL.
SECTION TWO
PLACE OF WORK
It is understood that VFIN's services will be rendered both on and off-site of
the Company. The Company agrees to provide an office, reasonable secretarial
support, and a reasonable amount of time of key employees while VFIN is on-site
performing the services described in Section One.
SECTION THREE
TIME DEVOTED TO WORK
In the performance of the services covered by this Agreement, the services and
the hours VFIN is to work will be entirely within VFIN's control and the Company
will rely upon VFIN to put in such number of hours as is reasonably necessary to
fulfill the spirit and the purpose of this Agreement.
SECTION FOUR
DURATION
The duration of this Agreement (the "Term") shall be from August 1, 2002 to
January 31, 2003, provided however, that this Agreement may be terminated at any
time by either Company or VFIN, with cause, upon ten (10) days written notice to
the other and provided, further that this Agreement maybe terminated by Company,
without cause, upon thirty (30) days written notice to the other While this
Agreement is in effect, VFIN will not take on additional clients within the
digital image archiving space that might be deemed to create a conflict of
interest. If this Agreement should terminate prior to the full term
contemplated, both parties are free to seek additional clients or representation
without limitations.
SECTION FIVE
PAYMENT
Upon execution of this Agreement, the Company will issue VFIN or its designees
Two Hundred Thousand (200,000) restricted shares of the Company's common stock
for services provided in the performance of services articulated in Section One
above. One Hundred Thousand (100,000) of these shares shall be due upon
execution of this Agreement and delivered to VFIN within 10 days of executing
this Agreement. Fifty Thousand Shares (50,000) shall be due 60 days after the
execution of this Agreement and the balance of Fifty Thousand Shares (50,000)
shall be due 120 days after execution of this agreement. In addition, the
Company will issue VFIN or its designees Two Hundred Thousand (200,000) warrants
to buy the Company's common stock at a price equal to 200% of the closing bid
price (on the OTCBB) on the date which this Agreement is executed, but not less
than $1.25 per share for the first warrant to purchase One Hundred Thousand
(100,000) shares of common stock due upon execution of this Agreement and
delivered to VFIN within 10 days of executing this Agreement, and not less than
$1.50 per share for the warrant to purchase Fifty Thousand (50,000) which shall
be due 60 days after execution of this Agreement, and not less than $1.75 per
share for the balance of warrant to purchase Fifty Thousand (50,000) which shall
be due 120 days after execution of this Agreement. These warrants shall be
5-year warrants and contain customary piggyback registration rights. The Company
also hereby agrees to pay VFIN a one time non-refundable retainer in the amount
of Ten Thousand Dollars ($10,000), which will be due upon execution of this
Agreement and delivered along with this executed Agreement.
For purposes of this Agreement, the term "Covered Transaction(s)" shall mean any
private placement, capital infusion, equity investment or financing with the
exception of "VFIN Introduced Purchase or Sale Transaction", "Debt Financing" or
"Subordinated Debt Financing" as defined below
For purposes of this Agreement, a "VFIN Introduced Purchase or Sale Transaction"
is any acquisition, sale, merger, consolidation, joint venture, exchange offer,
sale or license (or any variation thereof) of any part of or all of the business
or property of the Company, or other transaction, including, but not limited to:
the purchase or sale of stock or other transaction resulting in any change of
control of the Company, the acquisition of any shares of its stock, or the
disposition outside of the ordinary course of business of any of its assets.
For the purpose of this Agreement, "Debt Financing" shall include: (i) VFIN
introduced senior and working capital lines, or other similar borrowings
normally undertaken by businesses in the course of operations which includes
notes, bonds, equipment leasing, or debentures not expressly defined as "junior"
or "subordinated", (ii) combination of debt described in (i) above and
warrants/options, or (iii) convertible "debt, as described in (i) above, to
equity" security.
For the purpose of this Agreement, "Subordinated Debt Financing" shall mean VFIN
introduced debt financing junior or subordinated to other debt, i.e., repayable
in the case of liquidation only after senior debt with a higher claim has been
satisfied. This type of debt may be but not necessarily characterized by such
features as interest only payments for a specified period of time, equity
participation through warrants/options and other instruments, and convertible
features.
For the purposes of this Agreement, Total Consideration shall mean and be
computed as the total sale proceeds and other consideration received by Company,
its stockholders, directed beneficiaries, or any newly formed entity owned or
affiliated with or participated in by Company or any of its shareholders ("New
Company") upon consummation of the Covered Transaction including, but not
limited to: cash, securities, notes, debentures, purchase options, royalties,
management, consulting and employment agreement; marketing, licensing and
revenue contracts; agreements not-to-compete, including contingent and
installment payments; consideration for assets owned by affiliates of Company or
entities in any business relationship which are used in or are potentially
useful in Company's business; the total value of liabilities avoided by the
Company or assumed by the acquirer; the total value of all liabilities on the
Company's balance sheet that are transferred to, or assumed by, the acquirer of
the stock of Company in a stock transaction and any other tangible net benefit
to the Company, its shareholders or directed beneficiaries.
If a Covered Transaction is consummated between the Company and a VFIN Party
during the term of this Agreement, or a period of twelve (12) months thereafter,
Company shall pay VFIN, or cause VFIN to be paid, at the closing of such
transaction a fee computed by taking the Total Consideration multiplied by ten
percent (10%) plus expenses in the form of a non-accountable expense totaling
three percent (3%).
If a VFIN Introduced Purchase or Sale Transaction is consummated between the
Company and a VFIN Party during the term of this Agreement, or a period of
twelve (12) months thereafter, Company shall pay VFIN, or cause VFIN to be paid,
at the closing of such transaction a fee computed by taking the Total
Consideration received at each respective closing involved in such VFIN
Introduced Purchase or Sale Transaction multiplied by a percentage determined
pursuant to the following schedule:
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TOTAL CONSIDERATION FEE
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$0 to $999,999 5.0%
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$1,000,000 to $1,999,999 4.0%
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$2,000,000 to $2,999,999 3.0%
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$3,000,000 to $3,999,999 2.0%
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$4,000,000 or greater 1.0%
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An example of the fee due to VFIN based on the above fee schedule would be as
follows on an VFIN Introduced Purchase or Sale Transaction of $4,000,000 in
Total Consideration: Fee = ($1,000,000 X 5%) + ($1,000,000 X 4%) +
($1,000,000 X 3%) + ($1,000,000 X 2%) = $140,000
In the case of a "Debt Financing" where the source of debt financing, excluding
subordinated debt financing, is originated by VFIN or is from a VFIN Party and
the transaction closes during the Term of this Agreement, or within twelve (12)
months of any termination thereof, VFIN shall receive upon closing of the
transaction, a lump-sum consulting fee computed by taking the total commitment
multiplied by one point five (1.5%) percent. If such Debt Financing is coupled
with equity securities such as warrants, the value of the equity securities (to
the extent same are options, warrants, or similar securities) shall be
determined under the Black-Scholes methodology.
In the case of a "Subordinated Debt Financing" where the source of subordinated
debt financing is originated by VFIN or is from a VFIN Party and the transaction
closes during the Term of this Agreement, or within twelve (12) months of any
termination thereof, VFIN shall receive upon closing of the transaction, a
lump-sum consulting fee computed by taking the total commitment multiplied by
six (6%) percent. If such Subordinated Debt Financing is coupled with equity
securities such as warrants, the value of the equity securities (to the extent
same are options, warrants, or similar securities) shall be determined under the
Black-Scholes methodology.
All fees due to VFIN pursuant to this Agreement are payable pro rata in cash and
stock as received by the Company unless otherwise mutually agreed to by Company
and VFIN prior to executing a definitive agreement for a Covered Transaction.
All fees are payable to VFIN at the closing date of the subject transaction. To
the extent amounts are payable to Company after the closing date of a
transaction, Company shall pay VFIN the applicable fee associated with such
amounts at the time such amounts are actually received by Company. For example,
if $7,000,000 is payable on the closing of the Covered Transaction and
$3,000,000 is payable six (6) months thereafter, Company shall pay VFIN
($7,000,000 X 8.0%) on the day of the closing of the Covered Transaction and
($3,000,000 X 8.0%) upon its receipt of the final $3,000,000. Warrant and
registration rights as well as the Company's obligations to compensate VFIN as
described in this Section Five shall remain in full force and effect following
the termination of this Agreement.
Company shall grant VFIN customary piggyback registration rights (subject to
normal cut-backs) for the common stock and the common stock underlying the
warrants paid, granted or otherwise issued pursuant to Section 5 of this
Agreement.
These warrants shall be subject to a weighted average adjustment in the common
stock underlying such warrants and the per share exercise price in the event of
any stock splits, stock dividends, recapitalizations or similar events.
The Company will reimburse VFIN for all pre-approved business expenses
("Expenses") incurred by VFIN in the performance of the work defined herein. All
expenses in excess of $250 must be approved by the Company in advance of VFIN
incurring said expenses in order to qualify as being reimbursable by the
Company. As of the execution of this Agreement, these Expenses include 1) all
phone, fax and Internet connection charges; 2) mileage charges at Thirty-Two and
One-Half Cents ($.325) per mile; and 3) all reasonable travel expenses for
Company approved meetings. Expenses will be billed and paid on a monthly basis,
beginning on September 1, 2002 and on the first of each subsequent month.
SECTION SIX
STATUS OF VFIN; INDEMNIFICATION
VFIN is and shall be an independent contractor and is not and shall not be
deemed or construed to be an employee of the Company by virtue of this
Agreement. Neither VFIN nor the Company shall hold VFIN out as an agent,
partner, officer, director, or other employee of the Company in connection with
this Agreement or the performance of any of the duties, obligations or
performances contemplated hereby, and VFIN further specifically disclaims any
and all rights to an equity interest in or a partnership with the Company by
virtue of this Agreement or any of the transactions contemplated hereby, except
as specifically provided herein. VFIN specifically acknowledges and agrees that
they shall have no authority to execute any contracts or agreements on behalf of
the Company or any other person that, directly or indirectly through one or more
intermediaries, controls, is controlled by or is under common control with the
Company (an "Affiliate") and it shall have no authority to bind the Company or
its Affiliates to any obligation (contractual or otherwise). For purposes of
this Agreement, (a) the term "control" shall mean the possession, direct or
indirect, of the power to direct or cause the direction of the management and
policies of a person, whether through the ownership of voting interests, by
contract or otherwise and (b) the term "person" shall mean an individual,
partnership, corporation, limited liability company, limited liability
partnership, trust, joint venture or other entity.
It is hereby acknowledged and agreed that the Company has not, is not and shall
not be obligated to make, and that it is the sole responsibility of VFIN to
make, in connection with any income earned by VFIN from the Company, all
periodic withholding taxes, FICA taxes, SECA payments, Federal unemployment
taxes (FUTA) and any other Federal or state taxes, payments or filings required
to be paid, made or maintained.
In the event that VFIN becomes involved in any capacity in any action,
proceeding or investigation in connection with any matter referred to in this
Agreement not resulting from or relating to VFIN's recklessness, negligence, or
bad faith, the Company will reimburse VFIN for legal and other expenses as such
expenses are incurred in connection therewith. The Company will also indemnify
and hold harmless VFIN against losses, claims, damages or liabilities to which
VFIN may become subject in connection with any matter referred to in this
Agreement, except to the extent that any such loss, claim, damage or liability
results from the recklessness, negligence, or bad faith of VFIN performing the
services that are the subject of this Agreement. VFIN shall promptly give the
Company notice of any matter which VFIN has determined has given or could give
rise to a right of indemnification under this Agreement, provided that a failure
on the part of VFIN to notify the Company will not relieve the Company from any
liability that the Company may have on account of this indemnity or otherwise,
except to the extent that the Company shall have been materially prejudiced by
such. The Company shall be entitled to assume and control the defense of such
claim at its expense and through counsel of its choice The provisions of this
Section 6 shall survive any termination or expiration of this Agreement.
SECTION SEVEN
SERVICES FOR OTHERS
VFIN may, subject to the provisions of Section Four, during or subsequent to the
Term, perform services for any other person or firm without the Company's prior
approval.
SECTION EIGHT
OWNERSHIP
VFIN acknowledges that the Company will be free to use all work developed under
this Agreement for future and continued usage without any obligation to remit
any payment to VFIN other than that which is defined in this Agreement.
SECTION NINE
GOVERNING LAW
The laws of the State of Florida shall govern this Agreement. Any controversy or
claim arising out of, or relating to, this Agreement, to the making,
performance, or interpretation of it, shall be settled by arbitration in Fort
Lauderdale, Florida unless otherwise mutually agreed upon by the parties, under
the commercial arbitration rules of the American Arbitration Association then
existing, and any judgment on the arbitration award may be entered in any court
having jurisdiction over the subject matter of the controversy. If any legal
action or any arbitration or other proceeding is brought for the enforcement of
this Agreement, or because of an alleged dispute, breach, default, or
misrepresentation in connection with any of the provisions of this Agreement,
the successful or prevailing party or parties shall be entitled to recover
reasonable attorney's fees and other costs incurred in that action or
proceeding, in addition to any other relief to which it or they may be entitled.
The Governing Law provisions shall survive any termination of this Agreement.
SECTION TEN
INTEGRATION
This Agreement contains the entire Agreement among the parties and supersedes
all prior oral and written agreements, understandings, and representations among
the parties. No amendments to this Agreement shall be binding unless executed in
writing by all the parties.
IN WITNESS WHEREOF, the parties to this Agreement have duly executed it on the
day and year first above written.
COMPANY
A21, INC.
BY:
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Xxxxxx X. Xxxxx, Chairman Date
VFIN
VFINANCE INVESTMENTS, INC.
BY:
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Xxxxxxxx X. Xxxx, Principal Date
