AEGIS CAPITAL CORP. New York, New York 10019
Exhibit
10.24
AEGIS
CAPITAL CORP.
000
Xxxxxxx Xxxxxx, 00xx
Xxxxx
Xxx Xxxx,
Xxx Xxxx 00000
xxx.xxxxxxxx.xxx
July 9th,
2008
Xxxxxx
Xxxxxx
Managing
Director Investment Banking
000
000 0000
xxxxxxx@xxxxxxxx.xxx
Xx. Xxxx
Xxxxx
Chief
Executive Officer
000
Xxxxxx Xxxxx
Xxxxxx,
Xxx Xxxx, 00000
Dear Xx.
Xxxxx,
This
letter agreement (this “Agreement”) confirms the engagement of Aegis Capital
Corp. Inc. (“ACC”) by Vemics, Inc. (“Vemics” or the
“Company”) as exclusive placement agent and financial advisor
to arrange the sale of equity or equity-linked securities including convertible
preferred, convertible debt and warrants (“Equity” or the
“Securities”) on behalf of the Company. The sale of Securities (the “Financing”
or “Financings”) may be completed under an effective shelf registration
statement, if applicable, or may occur through a private placement pursuant to
one or more exemptions from registration under the Securities Act of 1933, as
amended (the “Securities Act”), and in compliance with applicable securities
laws of states and other jurisdictions (“Blue Sky Laws”).
1. Retention. Subject
to the terms and conditions of this Agreement, Vemics hereby engages ACC to act
on behalf of the Company as its exclusive placement agent and financial advisor
during the Authorization Period (as defined below) to arrange for the sale of
Securities in an amount and on terms and conditions satisfactory to the Company
and to assist Vemics in the pursuit of a sale or merger of the company, when, as
and if appropriately determined by the Company and ACC hereby accepts such
engagement.
During the Authorization Period,
Vemics shall not, and shall not permit its affiliates or their
representatives to, directly or indirectly, (i) offer any Securities for
sale to, or otherwise contact, discuss or negotiate with respect to any offer or
sale of any Securities with, any person, entity, organization or corporation
(ii) authorize anyone other than ACC to act on behalf of the Company to place
any Securities or (iii) have any discussions or negotiations with any person
other than ACC with respect to engaging such person as a finder, broker, dealer,
agent or financial advisor in connection with any sale of Securities. Vemics
shall, and shall cause its affiliates and its and their officers, directors,
employees and representatives to, promptly refer to ACC all offers, inquiries
and proposals relating to the sale of any Securities, received at any time
during the Authorization Period.
2. Authorization
Period. ACC’s engagement shall become effective on the date
hereof and, unless terminated by Vemics or ACC, shall continue in effect until
such termination. In the event that there has not been an initial
closing on a Financing within one hundred and eighty (180) days of the execution
of this Agreement, the Company may terminate this Agreement in writing upon
thirty days notice. The period from the date hereof through the
expiration by termination of this Agreement is called the “Authorization
Period.”
3. Compensation. Vemics
shall pay ACC the compensation set forth below:
a. Cash Fee for
Equity. Vemics shall pay ACC a cash placement fee equal
to ten 10% per cent on any gross proceeds received by the Company in connection
with the sale of Securities or a Financing. Cash placement fee shall be paid by
wire transfer on the closing date directly from and by the escrow account on
which the Company receives such aggregate consideration and/or directly from the
company by wire transfer on the closing date on which the Company receives such
aggregate consideration, should there be no escrow agent. Additionally, ACC
shall act as solicitation agent on behalf of Vemics in connection with the
exercise of any investor warrants issued in connection with the Financings and
shall pay ACC a cash fee of 4% of the aggregate consideration received by Vemics
in connection with the exercise of such warrants, if such warrants
exist.
b. Placement Agent Warrants for
Equity. On each closing date of a Financing on which aggregate
consideration is paid or becomes payable to the Company for the sale of its
Securities, Vemics shall issue to ACC or its permitted assigns, warrants (the
“Warrants”) to purchase such number of shares of the common stock of the Company
equal to ten per cent 10% of the aggregate number of shares of common stock of
the Company issued and issuable by the Company under and in connection with the
Financings. The number of shares of common stock issuable upon
exercise of the Warrants shall include all shares of common stock issuable under
the Securities, including, without limitation, shares issuable upon conversion
or exercise of the Securities. The Warrants shall provide for
cashless exercise (even if the Purchasers do not have such right) and have terms
and conditions identical to the Securities purchased by the Purchasers,
including, without limitation, anti-dilution and full ratchet provisions to take
into account any issuance of additional shares of common stock as a result of an
adjustment to the Securities or the shares of common stock underlying the
Securities. The exercise price per share of the Warrants shall be
equal to hundred and ten (110%) per cent of the effective price per share paid
by the Purchasers for the Securities (or in the event of a convertible security,
the conversion price or exercise price per share of common stock on the closing
date). The Warrants shall be exercisable after the date of issuance and shall
expire five years after the date of issuance, unless otherwise extended by the
Company. The Warrants shall include anti-dilution protection,
including protection against issuances of securities at prices (or with exercise
prices, in the case of warrants, options or rights) below the exercise price of
the Warrants. The Warrants shall not be callable or redeemable. The Warrants
shall also include one demand registration right exercisable following the first
anniversary of the closing, and piggyback registration rights. The
Warrants shall be transferable within ACC, at ACC’s discretion.
c. Tail Period. Vemics
shall and shall cause its affiliates to, pay to ACC, all compensation described
in this Section 3 with respect to all Securities sold to a purchaser or
purchasers at any time prior to the expiration of eighteen (18) months after the
termination of this Agreement (the “Tail Period”) if, (i) such purchaser or
purchasers were identified to the Company by ACC during the Authorization
Period, (ii) ACC advised the Company with respect to such purchaser or
purchasers during the Authorization Period or (iii) the Company or ACC had
discussions with such purchaser or purchasers during the Authorization Period.
At the expiration of this Agreement, ACC will provide to the Company a detailed
list identifying all persons, parties, entities, funds, institutions or other
such contacts with which ACC had discussions during the Authorization Period.
Such list shall serve as the determinant with regard to the Tail Period
compensation.
4. Reimbursements.
Regardless of whether the Financing or sales of Securities are consummated, the
Company shall reimburse ACC for all of its reasonable out-of-pocket expenses,
not to exceed $15,000 without the written consent of Vemics, incurred in
connection with its engagement, including the fees and disbursements of counsel
for ACC and the expenses of any travel that may be necessary.
5. Representations, Warranties
and Covenants of Vemics. Vemics represents and warrants to, and covenants
with, ACC as follows:
a. Neither
the Company nor any person acting on its behalf has taken, and Vemics shall not
and shall not permit its affiliates to take, directly or indirectly, any action
so as to cause any of the transactions contemplated by this Agreement to fail to
be entitled to exemption from registration or qualification under all applicable
securities laws or which constitutes general advertising or general solicitation
(as those terms are used in Regulation D under the Securities Act) with respect
to the Securities.
b. Vemics
shall take and shall cause its affiliates to take such actions as may be
required to cause compliance with this Agreement. ACC acknowledges
that Vemics may cause its affiliates to perform any of its obligations
hereunder; provided, however, that Vemics’ intention to do so (or any action by
Vemics or ACC in respect thereof) shall not relieve Vemics from its obligation
to perform such obligations when due.
c. The
Company will furnish, or cause to be furnished, to ACC such information as ACC
believes appropriate to its engagement hereunder (all such information, the
"Information") and the Company represents that all such Information will be
accurate and complete in all material respects. The Company will
promptly notify ACC of any change that may be material in such
Information. It is understood that ACC will be entitled to rely on
and use the Information and other information that is publicly available without
independent verification, and will not be responsible in any respect for the
accuracy, completeness or reasonableness of all such Information or to conduct
any independent verification or any appraisal or physical inspection of
properties or assets.
6. Representations, Warranties
and Covenants of ACC. ACC represents and warrants to, and
covenants with, Vemics as follows:
a. None
of ACC, its affiliates or any person acting on behalf of ACC or any of such
affiliates has engaged or will engage in any general solicitation or general
advertising (as those terms are used in Regulation D under the Securities Act)
with respect to the Securities.
b. ACC
will use its best efforts to conduct the offering and sale of Securities so that
Securities are sold in a transaction or series of transactions exempt from
registration under the Securities Act.
c. ACC
will send Materials related to the Financings only to persons that the ACC
reasonably believes are “accredited investors” (as defined under Rule 501(a) of
the Securities Act).
d. ACC
agrees that, except as otherwise required by law, regulation or court order or
as contemplated by its engagement hereunder, the non-public Information
furnished to ACC by the Company shall be held by ACC as
confidential.
7. Indemnification. The
Company agrees to the indemnification and other agreements set forth in the
attached Indemnification Agreement, the provisions of which are incorporated
herein by reference.
8. Subsequent Offerings.
If a Financing has been completed then ACC shall have the right of first refusal
from the date hereof until twenty four (24) months after the termination of this
Agreement, to act as the managing placement agent in connection with the sale of
equity or equity-linked securities through a Private Placement or Directed
Public Offering under a shelf registration statement. In addition,
during the Authorization Period and, if a Financing has been completed, then for
twenty four (24) months thereafter, ACC shall have the right of first refusal to
act as a lead manager in an underwritten public offering of the
Company’s securities. Furthermore, if a Financing has been completed as
contemplated hereunder, and the same investors or any combination of the same
investors provide the Company with additional capital at any time during a
period of twenty four (24) months following the termination of this engagement,
through the subsequent purchase of Securities from the Company, then, the
Company shall pay to ACC a fee equal to three and one half (3.5%) per cent of
the proceeds from such sale of Securities to those
investors.
9. Mergers &
Acquisitions. During the Authorization Period and for a period
of twenty four (24) months thereafter, ACC shall act as the financial advisor to
the Company with respect to any potential business combination involving the
Company, including acquisitions or mergers or the sale of the Company or certain
assets or divisions of the Company (a “Business Combination”). ACC shall be
compensated for any Business Combination completed during the Authorization
Period or for the twenty four (24) month period thereafter (the “Tail
Period”). Vemics shall pay ACC an amount (the “Transaction Fee”)
according to the schedule hereunder, based on the transaction value, which is
payable in cash on the closing date of such Business Combination, subject to a
minimum Transaction Fee of $250,000.
| Transaction Value |
Transaction
Fee
|
|
Up
to $10,000,000
|
5.0%
of such amount
|
|
Over
$10,000,000 up to $15,000,000
|
4.0%
of such amount
|
|
Over
$15,000,000 up to $20,000,000
|
3.0%
of such amount
|
|
Over
$20,000,000 up to $25,000,000
|
2.0%
of such amount
|
|
Over
$25,000,000
|
1.0%
of such amount
|
If a
Financing has been completed then for the twenty four (24) month period
following the termination of this Agreement, if Vemics elects to pursue the sale
of the Company or receives an offer to purchase or merge with the Company by a
person not covered under the section above, Vemics agrees to engage ACC to act
as its financial advisor in connection with the potential sale or merger. The
Company shall compensate ACC as its financial advisor under terms that reflect
ACC’s normal and customary compensation for such services, as agreed between
Vemics and ACC in good faith. ACC shall provide financial advisory
services on terms to be negotiated in good faith prior to the
Closing.
10. Survival of Certain
Provisions. The expense, indemnification, reimbursement and
contribution obligations of Vemics provided herein and in the attached
Indemnification Agreement and ACC’s rights to compensation (which term includes
all fees, amounts and Warrants due or which may become due) shall remain
operative and in full force and effect regardless of (i) any withdrawal,
termination or consummation of or failure to initiate or consummate any
transaction described herein or (ii) any termination or the completion or
expiration of this Agreement.
11. Notices. Notice
given pursuant to any of the provisions of this Agreement shall be given in
writing and shall be sent by certified mail, return receipt request or
recognized overnight courier or personally delivered (a) if to the Company, to
Vemics office at 000 Xxxxxx Xxxxxxx Xxxxx, Xxxxxx, Xxx Xxxx 00000 Attention:
Xxxx Xxxxx; and (b) if to ACC, to its office at 000 Xxxxxxx Xxxxxx, 00xx xxxxx,
Xxx Xxxx, XX 00000 Attention: Xxxxxx Xxxxxx
12. Confidentiality. No
financial advice rendered by ACC pursuant to this Agreement may be disclosed
publicly in any manner without ACC’s prior written consent, except as may be
required by law, regulation or court order but subject to the limitation
below. If the Company is required or reasonably expects to be so
required to disclose any advice, Vemics shall provide ACC with prompt notice
thereof so that ACC may seek a protective order or other appropriate remedy and
take reasonable efforts to assure that all of such advice disclosed will be
covered by such order or other remedy. Whether or not such a
protective order or other remedy is obtained, Vemics will and will cause its
affiliates to disclose only that portion of such advice, which the Company is so
required to disclose.
13. Miscellaneous. This
Agreement (including the attached Indemnification Agreement) sets forth the
entire agreement between the parties, supersedes and merges all prior written or
oral agreements with respect to the subject matter hereof, may only be amended
in writing and shall be governed by the laws of the State of New York applicable
to agreements made and to be performed entirely within such
State. The parties shall make reasonable efforts to resolve any
dispute concerning this Agreement, its construction or its alleged breach by
face-to-face negotiations. If such negotiations fail to resolve the dispute, the
dispute shall be finally decided by arbitration in accordance with the rules
then in effect of the American Arbitration Association. Any arbitration will be
conducted in the New York City metropolitan area. Vemics (for the
Company, for anyone claiming through or in the name of the Company and on behalf
of the equity holders of the Company) and ACC each hereby irrevocably waives any
right it may have to trial by jury in respect of any claim arising out of this
Agreement or the transactions contemplated hereby.
Either party may assign this Agreement
with the prior written consent of the other party.
If any provision of this Agreement is
determined to be invalid or unenforceable in any respect, such determination
will not effect such provision in any other respect or any other provision of
this Agreement.
Please
confirm that the foregoing correctly sets forth our agreement by signing and
returning to ACC the enclosed duplicate copy of this Agreement.
| Very truly yours, | |||
| NameAegis Capital Corp., Inc. | |||
|
By:
|
/s/ Xxxxxx Xxxxxx | ||
| Xxxxxx Xxxxxx | |||
| Managing Director | |||
ACCEPTED
AND AGREED TO this
19th
day of July
2008
By:
/s/ Xxxx
Xxxxx
Name:
Xxxx Xxxxx
Title: Chief
Executive Officer
| TO: | Aegis Capital Corp.., Inc. |
May 22,
2007
|
| 000 Xxxxxxx Xxxxxx, 00xx Xxxxx | ||
| Xxx Xxxx, XX 00000 |
In
connection with your engagement pursuant to our letter agreement of even date
herewith (the “Engagement”), we agree to indemnify and hold harmless Aegis
Capital Corp.., Inc. (“ACC” or “you”) and its affiliates, the respective
directors, officers, partners, agents and employees of ACC and its affiliates,
and each other person, if any, controlling ACC or any of its affiliates
(collectively, “Indemnified Persons”), from and against, and we agree that no
Indemnified Person shall have any liability to us or our owners, parents,
affiliates, security holders or creditors for, any losses, claims, damages or
liabilities (including actions or proceedings in respect thereof) (collectively
“Losses”) (A) related to or arising out of (i) our actions or failures to act
(including statements or omissions made, or information provided, by us or our
agents) or (ii) actions or failures to act by an Indemnified Person with our
consent or in reliance on our actions or failures to act, or (B) otherwise
related to or arising out of the Engagement or your performance thereof, except
that this clause (B) shall not apply to any Losses that are finally judicially
determined to have resulted primarily from your bad faith or gross negligence or
breach of the letter agreement. If such indemnification is for any
reason not available or insufficient to hold you harmless, we agree to
contribute to the Losses involved in such proportion as is appropriate to
reflect the relative benefits received (or anticipated to be received) by us and
by you with respect to the Engagement or, if such allocation is judicially
determined unavailable, in such proportion as is appropriate to reflect other
equitable considerations such as the relative fault of us on the one hand and of
you on the other hand; provided, however, that, in no event shall the amount to
be contributed by you exceed the fees actually received by you under the
Engagement.
We will
reimburse each Indemnified Person for all expenses (including reasonable fees
and disbursements of counsel) as they are incurred by such Indemnified Person in
connection with investigating, preparing for or defending any action, claim,
investigation, inquiry, arbitration or other proceeding (“Action”) referred to
above (or enforcing this agreement or any related engagement agreement), whether
or not in connection with pending or threatened litigation in which any
Indemnified Person is a party, and whether or not such Action is initiated or
brought by you . We further agree that we will not settle or
compromise or consent to the entry of any judgment in any pending or threatened
Action in respect of which indemnification may be sought hereunder (whether or
not an Indemnified Person is a party therein) unless we have given you
reasonable prior written notice thereof and used all reasonable efforts, after
consultation with you, to obtain an unconditional release of each Indemnified
Person from all liability arising therefrom. In the event we are
considering entering into one or a series of transactions involving a merger or
other business combination or a dissolution or liquidation of all or a
significant portion of our assets, we shall promptly notify you in
writing. If requested by ACC, we shall then establish alternative
means of providing for our obligations set forth herein on terms and conditions
reasonably satisfactory to ACC.
If
multiple claims are brought against you in any Action with respect to at least
one of which indemnification is permitted under applicable law and provided for
under this agreement, we agree that any judgment, arbitration award or other
monetary award shall be conclusively deemed to be based on claims as to which
indemnification is permitted and provided for. In the event that you
are called or subpoenaed to give testimony in a court of law, we agree to pay
your expenses related thereto and $5,000 per person per day for every day or
part thereof that we are required to be there or in preparation
thereof. Our obligations hereunder shall be in addition to any rights
that any Indemnified Person may have at common law or
otherwise. Solely for the purpose of enforcing this agreement, we
hereby consent to personal jurisdiction and to service and venue in any court in
which any claim which is subject to this agreement is brought by or against any
Indemnified Person. We acknowledge that in connection with the
Engagement you are acting as an independent contractor with duties owing solely
to us. YOU HEREBY AGREE, AND WE HEREBY AGREE ON OUR OWN BEHALF AND,
TO THE EXTENT PERMITTED BY APPLICABLE LAW, ON BEHALF OF OUR SECURITY HOLDERS, TO
WAIVE ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY CLAIM, COUNTER-CLAIM OR
ACTION ARISING OUT OF THE ENGAGEMENT, YOUR PERFORMANCE THEREOF OR THIS
AGREEMENT.
The
provisions of this agreement shall apply to the Engagement (including related
activities prior to the date hereof) and any modification thereof and shall
remain in full force and effect regardless of the completion or termination of
the Engagement. This agreement and any other agreements relating to
the Engagement shall be governed by and construed in accordance with the laws of
the state of New York, without regard to conflicts of law principles
thereof.
Very truly yours,
|
ACCEPTED
AND AGREED TO this ________day
of__________
|
|||
|
AEGIS
CAPITAL CORP.., INC.
|
Client:
|
|
|
|
By:
|
By:
|
||
|
Name:
Xxxxxx Xxxxxx
|
Name:
Xxxx Xxxxx
|
||
|
Title: Managing
Director
|
Title: Chief
Executive Officer
|
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