CORPORATE FINANCE
Oceana
Partners
CORPORATE
FINANCE
March
16,
2007
Xx.
Xxxxxx Xxxxxxxx-Xxxxx
Chief
Executive Officer
000
Xxxx
Xxxxxx, Xxxxx 000
New
York,
NY 10022
Dear
Xxxxxx,
This
engagement letter shall serve as our agreement (the “Agreement”) under which
Oceana Partners, LLC (“Oceana” or the “Advisor”) is retained as a financial
advisor and placement agent to Vistula Communications Services, Inc. (the
“Company”) for placing, on a private basis, approximately $2.5 million to $3
million of the Company’s securities (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 Offering. 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 Xxxxxx 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.
Term.
This
Agreement shall become effective on the execution date hereof and, unless
previously terminated pursuant to Paragraph 9 below, shall continue in effect
until the earlier of the completion of the Financing, or, if no terms, letter
of
intent or other agreement with Oceana Investors has been agreed to by the
Company regarding the Financing, then sixty (60) days from the date of this
Agreement (the "Termination Date"). The period from the date hereof until
the
Expiration Date is hereafter referred to as the “Term.”
3.
Compensation.
| a.) |
In
connection with the Financing, on each date on which any securities
are
issued and cash is received by the Company from new investors (including
Xxxx Partners and their affiliates even though Xxxx is an existing
investor (collectively, “New Investors”)) the Company shall pay to Oceana
or its designee, in cash, a commission equal to eight percent (8%)
of the
gross purchase price for the securities from New Investors only.
In
addition, the Company shall issue to Oceana, or its designee, two
five
year common stock purchase warrants (the "Warrants"), each exercisable
at
a $1.00 to purchase one share of common stock, for every dollar raised
in
the Financing from New Investors. 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
equity or
equity linked securities issued on the Closing Date.
|
Oceana
Partners LLC
000
Xxxxxxx Xxxxxx, Xxxxx 0000
New
York,
New York 10001
Phone
(000) 000-0000 Fax (000) 000-0000
Oceana
Partners
CORPORATE
FINANCE
| b.) |
The
Company shall have the right to reject in whole or in part any proposed
purchaser of the securities in its sole and absolute discretion.
Oceana
shall not be entitled to any commission hereunder relating to such
proposed purchaser.
|
| 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.
|
4.
Retainer.
No
retainers shall be payable hereunder.
5.
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.
6.
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, 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.
Oceana
Partners
CORPORATE
FINANCE
7.
Arbitration.
Any
dispute between the Company and Oceana shall be subject to binding arbitration
before a three-arbitrator panel in accordance with the rules of the American
Arbitration Association. Prior to the selection of the arbitrators 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.
8.
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.
9.
Termination Subject
to Paragraph 6, 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 Financing and the
Sale;
-
breach
of any commitments hereunder by either party (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 because
of
a breach by the Company, the Company will forthwith pay the Advisor those
of its
expenses and fees incurred or owing up to the Termination Date.
10.
Tail.
Within
20 business days of the Termination Date, the Advisor shall deliver to the
Company a list identifying all investors (not including prior investors)
that
Oceana had solicited in connection herewith (a “Tail Investor”). In the event
the Company thereafter receives funding from any Tail Investor or an affiliate
thereof, within 12 months of the Termination Date (the “Tail Period”), then the
Company shall pay the Advisor the fee as described in Paragraph 3 (the “Tail
Fee”). The Tail Fee shall apply to any Tail Investors, including their
affiliates, and to any third party investor introduced to the Company by
Tail
Investors or affiliates thereof assuming such third party investor was not
previously in discussions with the Company before such
introduction.
11.
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.
Oceana
Partners
CORPORATE
FINANCE
CONTACT
ADDRESSES:
|
Oceana
Partners LLC:
|
Xx.
Xxxxxxxxxx X. Xxxxxx
|
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Oceana
Partners LLC
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000
Xxxxxxx Xxxxxx, Xxxxx 0000
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New
York, NY 10001
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Tel:
000 000-0000
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Fax:
000 000-0000
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Xx.
Xxxxxx Xxxxxxxx-Xxxxx
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Chief
Executive Officer
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000
Xxxx Xxxxxx, Xxxxx 000
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New
York, NY 10022
|
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Tel.
000 000-0000
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and
|
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Xxxxx
Xxxx, LLP
|
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Xxxx
Xxxx
|
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000
Xxxxxxx Xxxxxxxxx
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Boston,
MA 02110
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Tel.
000 000-0000
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12.
Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws
of the
State of Delaware.
13.
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.
Sincerely,
Oceana
Partners LLC
/s/
Xxxxxxxxxx X. Xxxxxx
Xxxxxxxxxx
X. Xxxxxx
Senior
Managing Director
ACCEPTED
AND AGREED TO BY:
/s/
Xxxxx
X. Xxxxxx
Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx
Chief
Financial Officer
