FINANCIAL ADVISORY AND INVESTMENT BANKING AGREEMENT
Exhibit 10.8
This
Agreement is made and entered into this 2nd day of November, 2007, between
vFinance Investments, Inc. (“VFIN”) and ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ Holdings, Inc. (OTC
BB: MBKR) (“Company”).
A
glossary of definitions as used in this Agreement is set forth in Paragraph 11,
below.
The
parties hereto agree as follows:
a)
Company hereby engages VFIN as Company’s non-exclusive financial advisor to
render financial and other general advice as an investment banker, including,
without limitation, advice relating to “Transactions” and/or “Financings” and
similar matters, as may be reasonably requested by Company. In that
regard, VFIN will assist Company in identifying, analyzing, structuring,
negotiating and obtaining sources of financing for suitable business
opportunities which Company may take advantage of by purchase or sale of stock
or assets, assumption of liabilities, merger, consolidation, tender offer,
strategic relationship, joint venture, franchise agreement, licensing agreement,
royalty agreement, financing arrangement or any similar transaction or
combination thereof. This Agreement shall not be construed as a firm
commitment or guarantee of financing which shall be on a “best efforts” basis
only. VFIN shall obtain the consent of Company prior to contacting
any potential participants in a proposed Transaction or
Financing. The decision to consummate a Transaction and/or Financing
shall be in the Company’s sole and absolute discretion, and no compensation
shall be due under this agreement unless the Company notifies VFIN in writing
that it wishes to utilizes its services.
b) VFIN shall not be
required to undertake duties not reasonably within the scope of the financial
advisory or investment banking services contemplated by this Agreement or to
spend any minimum amount of time in providing such services. VFIN
does not provide tax, accounting or legal advice. Public offerings,
if any, shall be subject to a separate agreement and are expressly not addressed
in this Agreement.
c) VFIN shall render such
other financial advisory and investment banking services as may from time to
time be agreed upon in writing by VFIN and Company (e.g., fairness opinions,
business plans, etc.). The fees payable for any such other services
shall be customary investment banking fees to be mutually agreed upon based upon
the nature and type of such services to be rendered.
2. Term: Subject
to Paragraph 4, this Agreement shall commence upon execution and be effective
for a period of Twelve (12) months and may be terminated on thirty days’ written
notice by either party to the other.
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3. Compensation: In
consideration of the services to be rendered by VFIN hereunder, Company shall
issue to VFIN “Retainer Shares”, “Transaction Fees” and/or “Financing
Fees.”
a) Retainer
Shares: Upon execution hereof, Company shall issue to VFIN fifty thousand
(50,000) shares of Company (the “Retainer Shares”). The Retainer
Shares Agreement shall contain customary terms, including without limitation,
piggyback registration rights. The Retainer Shares shall be issued to
VFIN and/or its designees.
b)
Transaction Fees: At the first closing under each Transaction,
Company shall pay to VFIN a fee (each a “Transaction Fee”) in immediately
available funds equal to five percent (5%) of the “Aggregate Consideration”
exchanged or received in connection with such Transaction; provided,
however,
that any Transaction Fee due to VFIN as a result of consideration which is
contingent upon the occurrence of some future event (e.g., an earn out or the
realization of earnings projections) shall be payable at the earlier of: (i) the
receipt of such consideration, or (ii) the time that the amount of such
consideration can be determined.
c) Financings:
(i) Financing
Fees: At the first closing under each Financing, Company shall
pay to VFIN a fee on VFIN-introduced sources (each a “Financing Fee”) in
immediately available funds equal to the sum of one and one-half percent (1
1/2%) of all secured debt funds available; plus
four percent (4%) of all unsecured debt funds available, plus
ten percent (10%) of all equity funds raised in amounts up to $3 million, eight
percent (8%) in amounts from $3 million to $6 million, and seven percent (7%)
for amounts greater than $ 6million, in the private markets in connection with
such Financing. For purposes of calculating any Financing Fee,
convertible securities shall be treated as equity. The Financing Fee shall be
calculated on the gross total credit facility before any deductions, including
but not limited to fees, deposits, transaction expenses, reserves, insurance or
other amounts withheld or paid by the “Financing Source.” If a Transaction
results from an introduction by the Company to a Financing Source, then fees
associated with that particular Transaction shall be reduced by
half. If the funds raised by Company pursuant to a Financing are to
be received in whole or in part via installment payments, such installment
payments shall be valued on a discounted present value basis using a discount
rate of eight percent (8%) per annum.
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(ii)
Financing
Warrants: In addition, at the first closing under the first Financing
hereunder, Company shall issue to VFIN additional warrants (the “Financing
Warrants”) to purchase such number of shares of the common stock of Company
equal to: (x) ten percent (10%) of the aggregate number of fully diluted shares
of common stock as shall have been purchased by Financing Sources pursuant to
the Financing, or (y) ten percent (10%) of the aggregate number of fully diluted
shares of common stock into which any convertible securities which shall have
been purchased by Financing Sources pursuant to the Financing may be converted
(after giving effect to any increase in shares under a ratchet or similar
provision pursuant to which the number of shares initially purchased is
subsequently increased). The Financing Warrants shall be exercisable
for a period of five years from the date of issuance on the same terms and
conditions applicable to, and with an exercise price per share equal to the
effective per share price paid by, Financing Sources for a share of common stock
of Company. The terms of the Financing Warrants shall be set forth in
an agreement (the “Financing Warrant Agreement”) in form attached hereto as
Annex B. The Financing Warrant Agreement shall contain customary
terms, including without limitation, provisions for “cashless” exercise, price
based anti-dilution, and customary piggyback registration rights.
d) Transactions
and Financings of Related Entities: In calculating the
compensation payable to VFIN hereunder, the parties understand and agree that
the definition of Transaction and Financing shall be broadly construed so as to
include any transactions and financing of Company’s subsidiaries, affiliates,
successors or other controlled units, either existing or formed subsequent to
the date hereof.
4. Non-renewal
or Termination: Upon non-renewal or termination of this
Agreement, VFIN shall provide Company with a written list of parties with whom
it has had discussions in connection with any proposed Transaction or
Financing. Notwithstanding any such non-renewal or termination, VFIN
shall be entitled to the compensation provided under Paragraph 3 with respect to
any Transaction or Financing which shall be consummated with any party named on
such list within Eighteen (18) months following such non-renewal or
termination.
5. Reimbursement
of Expenses: Promptly following presentation of customary documentation,
Company shall reimburse VFIN for all reasonable fees and disbursements of VFIN’s
outside counsel and VFIN’s reasonable travel and out-of-pocket expenses as
incurred in connection with the services performed by VFIN pursuant to this
Agreement, including without limitation, hotel, food and associated expenses
including long-distance telephone calls; provided
that to the extent any such reimbursement would cause aggregate reimbursement to
exceed Three Thousand Dollars ($3,000), such excess fees and disbursements,
shall be subject to Company’s prior approval.
6. No
Public Disclosure: Company acknowledges that all opinions and advice
(written or oral) given by VFIN to Company in connection with VFIN’s engagement
are intended solely for the benefit and use of Company and Company agrees that
no person or entity other than Company shall be entitled to make use of or rely
upon such opinion or advice to be given hereunder, and no such opinion or advice
shall be used for any other purpose or reproduced or disseminated, in any manner
or for any purpose, nor may Company make any public references to VFIN without
VFIN’s prior written consent.
7. Non-Exclusive
Services: Company acknowledges that VFIN and its affiliates
are in the business of providing financial advisory services, investment banking
services, and consulting advice to others. Nothing herein contained
shall be construed to limit or restrict VFIN in conducting such business with
others, or in rendering such advice to others, except as such advice may relate
to matters relating to Company’s business and properties.
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8. Reliance Upon Information: Company recognizes and confirms that, in advising Company and in fulfilling its engagement hereunder, (i) VFIN will use and rely on data, material and other information furnished to VFIN, and (ii) VFIN may rely upon such data, material and other information without any independent investigation or appraisal to verify its accuracy, completeness or veracity, except to the extent VFIN has actual knowledge to the contrary. Company represents and warrants that all such data, material and other information provided by Company will be true and accurate in all material respects and will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein not misleading in light of the circumstances under which such statements are made. VFIN shall be under no obligation to make an independent appraisal of assets or an independent investigation or inquiry as to any information regarding, or any representations of, any other participant in a Transaction or Financing, nor shall VFIN have any liability with regard thereto. If, in VFIN’s opinion after completion of its due diligence process, the condition or prospects of Company, financial or otherwise, are not substantially as represented or do not fulfill VFIN’s expectations, VFIN shall have the sole discretion to determine its continued participation in any proposed Financing and/or Transaction.
9. Indemnification
Agreement: To induce VFIN to act on behalf of Company in connection with
VFIN’s engagement hereunder, Company and VFIN are entering into a separate
indemnification agreement substantially in the form attached hereto as Annex A
and dated the date hereof, providing for the indemnification of VFIN by
Company. VFIN has entered into this Agreement in reliance on the
indemnities set forth in such indemnification agreement.
10. Independent
Contractor: VFIN shall perform its services hereunder as an independent
contractor and not as an employee of Company or an affiliate
thereof. VFIN shall have no authority to act for, represent or bind
Company or any affiliate thereof in any manner, except as may be agreed to
expressly by Company in writing from time to time.
11. Definitions:
a) “Aggregate
Consideration” shall mean the total consideration (i.e., stock, cash,
assets and all other property (real or personal, tangible or intangible) plus
any debt assumed) exchanged or received, or to be exchanged or received directly
or indirectly by Company or any of its security holders or subsidiaries or
affiliates in connection with a Transaction, including, without limitation, any
amounts paid or received, or to be paid or received pursuant to any employment
agreement (to the extent such amounts exceed reasonable and customary
compensation for actual services to be rendered), consulting agreement, covenant
not to compete, earn-out or contingent payment right or similar arrangement,
agreement or understanding, whether oral or written, associated with a
Transaction.
Consideration
paid or to be paid other than in cash shall be valued at fair market value,
except that liabilities assumed and notes issued will be valued at the face
amount thereof. The fair market value of consideration paid in
securities for which there is a recognized trading market shall be based on the
closing “offer” price of the securities on the day immediately preceding the
closing of the Transaction and shall be computed as if the securities were
freely tradable.
b) “Company”
shall mean ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ Holdings, Inc.
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c) “Financing”
shall mean any debt financing and/or equity investment in Company pursuant to
which funds are received or to be received by Company, including without
limitation any lease financing, vendor financing, government sponsored financing
or any similar transaction or combination thereof. The amount of
funds raised pursuant to a Financing shall be deemed to include the total value
of “Securities” sold directly or indirectly, in connection with the Financing,
including any proceeds received by Company upon the exercise of any options,
warrants and/or similar securities; any amounts paid into escrow; and any
amounts payable in the future whether or not subject to any
contingency. For purposes of clarity, Financing shall not
include:
(x)
a “Transaction” (i.e., a transaction pursuant to which funds are received by
Company’s shareholders); or unless initiated with the assistance of, or
materials prepared by, VFIN: (y) working capital financing provided by
commercial bank loan departments; or (z) extensions, renewals or modifications
of financings or refinancings with existing creditors.
d) “Financing
Fee” is defined in Section 3(c)(i).
e) “Financing
Source” shall mean a party participating in a Financing by being the
source of funds, raised thereunder through the purchase or other acquisition or
receipt of Securities.
f) “Financing
Warrants” are defined in Section 3(c)(ii).
g) “Financing
Warrant Agreement” is defined in Section 3(c)(ii).
h) “Retainer
Shares” is defined in Section3(a).
i) “Securities”
shall mean debt, mezzanine and/or equity interests or any combination
thereof.
j) “Transaction”
shall mean any merger, business combination or reorganization, acquisition of
some or all of the stock or assets of another company, purchase or sale of some
or all of the stock or assets of Company not in the ordinary course of business,
joint venture, strategic relationship, licensing agreement, royalty agreement,
franchise agreement, distribution agreement or any similar transaction or
combination thereof.
k) “Transaction
Fee” is defined in Section 3(b).
a)
Entire
Agreement: This Agreement and Annex A constitute the entire
agreement and understanding of the parties hereto, and supersede any and all
previous agreements and understandings, whether oral or written, with respect to
the matters set forth herein.
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No
provision of this Agreement may be amended, modified or waived, except in a
writing signed by the parties. This Agreement and the Annex shall be
binding upon and inure to the benefit of each of the parties and their
respective successors, legal representatives and assigns.
b) Notice:
Any notice or communication permitted or required hereunder shall be in writing
and shall be deemed sufficiently given if hand-delivered or sent postage prepaid
by certified mail, return receipt requested as set forth below, or to such other
address as either party may notify the other of in writing:
if to
Company,
to:
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ Holdings, Inc.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇-▇▇▇
Attn: ▇▇▇▇
▇▇▇▇▇▇▇▇▇
Chief
Executive Officer
if to
vFinance
Investments, Inc.
to: vFinance
Investments, Inc.
▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Chief
Financial Officer
c) Governing
Law; Exclusive Jurisdiction: This Agreement shall be construed
in accordance with and governed by the laws of the State of New York, without
giving effect to its conflict of law principles. Any dispute which
may arise between the parties arising out of or in connection with
this Agreement shall be adjudicated before a court located in New York and they
hereby submit to the exclusive jurisdiction of the courts of the State of New
York and of the federal court in the applicable district of New York with
respect to any action or legal proceeding commenced by any party, and
irrevocably waive any objection they now or hereafter may have respecting the
venue of any such action or proceeding brought in such a court or respecting the
fact that such court is an inconvenient forum, waive trial by jury in any such
action or proceeding, and consent to the service of process in any such action
or legal proceeding by means of registered or certified mail, return receipt
requested, to the address set forth in Paragraph 12
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If the
foregoing correctly sets forth our understanding with respect to the foregoing,
please so indicate by signing below, at which time this letter shall become a
binding agreement.
VFINANCE
INVESTMENTS, INC.
By:________________________
▇▇▇▇▇▇▇▇
▇. ▇▇▇▇
Executive Vice President,
Investment Banking
Accepted
and Agreed:
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
HOLDINGS, INC.
By:_________________________________
Name: ▇▇▇▇
▇▇▇▇▇▇▇▇▇
Title: Chief
Executive Officer
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ANNEX
A
Indemnification
Provisions to Financial Advisory and Investment Banking Agreement (the
“Agreement”) dated September 25th, 2007 between vFinance Investments,
Inc. (“VFIN”) and ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ Holdings, Inc. (the
“Company”)
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1.
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Company
agrees to (a) reimburse VFIN, its affiliates and their respective
directors, officers, employees, agents and controlling persons (each, an
“Indemnified Party”) promptly, upon demand, for actual, out-of-pocket
expenses (including reasonable fees and expenses for legal counsel) as
they are incurred in connection with the investigation of, preparation for
or defense of any pending or threatened claim, or any litigation,
proceeding or other action in connection with or arising out of or
relating to the engagement of VFIN under the Agreement, or any actions
taken or omitted, services performed or matters contemplated by or in
connection with the Agreement, (collectively, a “Claim”); and (b) to
indemnify and hold harmless each Indemnified Party from and against any
and all out-of-pocket losses, claims, damages and liabilities, joint or
several, to which any Indemnified Party may become subject, including any
amount paid in settlement of any litigation or other action (commenced or
threatened) to which Company shall have consented in writing (such consent
not to be unreasonably withheld), whether or not any Indemnified Party is
a party and whether or not liability resulted; provided,
however,
that Company shall not be liable in respect of any loss, claim, damage or
liability to the extent that a court or other agency having competent
jurisdiction shall have determined by final judgment (not subject to
further appeal) that such loss, claim, damage or liability shall have been
incurred solely as a direct result of the willful misconduct or gross
negligence of such Indemnified
Party.
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An
Indemnified Party shall have the right to retain separate legal counsel of its
own choice to conduct the defense and all related matters in connection with any
Claim, and such counsel shall to the fullest extent, consistent with its
professional responsibilities, cooperate with Company and legal counsel
designated by Company.
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2.
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Company
will not, without the prior written consent of each Indemnified Party
settle, compromise or consent to the entry of any judgment in any pending
or threatened Claim in respect of which indemnification may be reasonably
sought hereunder (whether or not any Indemnified Party is an actual or
potential party to such Claim), unless such settlement, compromise or
consent includes an unconditional, irrevocable release of each Indemnified
Party against whom such Claim may be brought from any and all liability
arising out of such Claim.
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3.
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In
the event the indemnity provided for hereunder is unavailable or
insufficient to hold any Indemnified Party harmless, then Company shall
contribute to amounts paid or payable by an Indemnified Party in respect
of such Indemnified Party’s losses, claims, damages and liabilities as to
which the indemnity provided for hereunder is unavailable or insufficient
(i) in such portion as appropriately reflects the relative benefits
received by Company, on the one hand, and the Indemnified Party, on the
other hand, in connection with the matters as to which losses, claims,
damages or liabilities relate, or (ii) if the allocation provided by (i)
above is not permitted by applicable law, in such proportion as
appropriately reflects not only the relative benefits referred to in
clause (i) but also the relative fault of Company, on the one
hand, and the Indemnified Party, on the other hand, as well as any other
equitable considerations. The amounts paid or payable by a
party in respect of losses, claims, damages and liabilities referred to
above shall be deemed to include any reasonable legal or other
out-of-pocket fees and expenses incurred in defending any litigation,
proceeding or other action or claim. Notwithstanding the
provisions hereof, VFIN’s share of the liability hereunder shall not be in
excess of the amount of fees actually received by VFIN under the Agreement
(excluding any amounts received as reimbursement of expenses by
VFIN).
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4.
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These
Indemnification Provisions shall remain in full force and effect and
survive the expiration of the term of the Agreement, and shall be in
addition to any liability that Company might otherwise have to any
Indemnified Party under the Agreement or
otherwise.
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5.
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Each
party hereto consents to personal jurisdiction and service of process and
venue in any court in the State of New York in which any claim for
indemnity is brought by any Indemnified Person, except as provided in
Section 12 (c) of the Agreement.
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VFINANCE
INVESTMENTS, INC.
By: _________________________
▇▇▇▇▇▇▇▇ ▇.
▇▇▇▇
Executive Vice
President, Investment Banking
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
HOLDINGS, INC.
By: _________________________
▇▇▇▇
▇▇▇▇▇▇▇▇▇
Chief Executive
Officer
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