TerraNova Capital Partners Inc. European American Equities, Inc. New York, New York 10017
EXHIBIT
10.2
XxxxxXxxx
Capital Partners Inc.
European
American Equities, Inc.
000
Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxx
Xxxx, Xxx Xxxx 00000
February 4,
2008
CONFIDENTIAL
Sequiam
Corporation
000
Xxxxxxx Xxxx
Xxxxxxx,
Xxxxxxx 00000
Attention: Xx.
Xxxx X. Xxxxxxxxxxx
Executive Vice President and Chief
Financial Officer
Dear Xx.
Xxxxxxxxxxx:
This letter agreement (this
“Agreement”) confirms the engagement of XxxxxXxxx Capital Partners Inc. and its
subsidiary, European American Equities, Inc. (collectively, “XxxxxXxxx”), by
Sequiam Corporation (the “Company”) as placement agent to arrange the sale of
equity or equity-linked securities, including convertible debt or warrants (the
“Securities”), on behalf of the Company and its successors, subsidiaries and
affiliates. The sale of Securities (a “Financing” or “Financings”)
may be completed under an effective shelf registration statement, if applicable,
or may occur through a series of one or more private placements 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, the Company hereby engages
XxxxxXxxx to act on behalf of the Company and its successors, subsidiaries and
affiliates as its exclusive placement agent during the Authorization Period (as
defined below) to arrange the sale of Securities in an amount and on terms and
conditions satisfactory to the Company, and XxxxxXxxx hereby accepts such
engagement, subject to the terms and conditions hereof.
2. Authorization
Period. The engagement of XxxxxXxxx shall become effective on the
date hereof and shall expire 60 days after the date of the Company’s acceptance
of this Agreement, which period shall be extended for an additional 45-day
period if the Company has not notified XxxxxXxxx in writing of the termination
of this Agreement, subject to Section 12 hereof, at least 10 days prior to the
expiration of the initial 60-day term. The period from the date
hereof through the expiration of this Agreement is called the “Authorization
Period.” If the Company fails to reorganize as a public company and
is taken private by its lender, then this agreement shall
terminate.
3. Compensation. The
Company shall pay XxxxxXxxx the compensation set forth below:
a. Cash
Fee. The Company shall pay XxxxxXxxx a cash placement fee equal to 8%
on any gross proceeds received by the Company in connection with each
Financing. The cash placement fee shall be paid by wire transfer on
the closing date on which the Company receives such aggregate
consideration. XxxxxXxxx shall act as solicitation agent on behalf of
the Company in connection with the exercise of any investor warrants issued in
connection with the Financings and the Company shall pay XxxxxXxxx a cash fee of
8% of the aggregate consideration received by the Company in connection with the
exercise of such warrants. The foregoing fees shall be reduced to 4% if such
proceeds received by the Company originate through the efforts of Crestview
Capital Partners, vFinance, Inc. or the Company. The foregoing fees shall also
be reduced to 4% for any bridge loan money that may be advanced to the Company
under this agreement.
b. Placement
Agent Warrants. On each closing date of a Financing, the Company
shall issue to XxxxxXxxx or its permitted assigns, for an aggregate
consideration of $1.00, warrants (the “Warrants”) to purchase such number of
shares of the common stock of the Company (or units of Equity Securities if the
Financing involved the sale of units of Equity Securities) equal to 8% 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 (or units of Equity Securities) 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 of the Securities (the “Purchasers”) do not
have such right). The exercise price per share of the Warrants shall
be equal to the effective price per share (or unit) 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 seven years
after the date of issuance, unless otherwise extended by the
Company. 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
XxxxxXxxx, at XxxxxXxxx’x discretion. The foregoing Placement Agent Warrants
shall be reduced to 4% 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 if such proceeds received by the Company originate through the
efforts of Crestview Capital Partners, vFinance, Inc. or the Company. The
foregoing Placement Agent Warrants shall also be reduced to 4% for any bridge
loan money that may be advanced to the Company under this
agreement.
c. Tail
Period. The Company shall, and shall cause its affiliates to, pay to XxxxxXxxx
all compensation described in this Section 3 with respect to all Securities sold
to a Purchaser or Purchasers at any time during the 18-month period following
the date of expiration or termination of this Agreement (the “Tail Period”) if
(i) such Purchaser or Purchasers were identified to the Company directly or
indirectly by XxxxxXxxx during the Authorization Period (as evidenced by the
investor log maintained by XxxxxXxxx), (ii) XxxxxXxxx advised the Company with
respect to such Purchaser or Purchasers during the Authorization Period or (iii)
the Company or XxxxxXxxx had discussions with such Purchaser or Purchasers
during the Authorization Period (as evidenced by the investor log maintained by
XxxxxXxxx). In addition, the Tail Period shall apply to all
affiliates or assigns of said Purchaser or Purchasers. The foregoing Tail Period
shall not apply if such proceeds received by the Company originate through the
efforts of Crestview Capital Partners, vFinance, Inc. or the
Company.
4. Reimbursements.
Regardless of whether a Financing or sales of Securities are consummated, the
Company shall reimburse XxxxxXxxx on a monthly basis for all of its reasonable
out-of-pocket expenses, including, but not limited to, travel, legal and
communication expenses incurred in connection with, or arising out of, our
activities under or contemplated by this Agreement, provided that any expense in
excess of $1,000 (other than our reasonable legal fees and expenses) shall
require the prior approval of the Company. Such reimbursements shall
be made promptly upon submission by XxxxxXxxx of its statements
therefor.
5. Representations,
Warranties and Covenants of the Company. The Company represents and
warrants to, and covenants with, XxxxxXxxx as follows:
a. Neither
the Company nor any person acting on its behalf has taken, and the Company 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. The
Company shall take and shall cause its affiliates to take such actions as may be
required to cause compliance with this Agreement. If the Company
shall cause its affiliates to perform any of its obligations hereunder, the
Company shall not be relieved of its obligation to perform such obligations when
due.
c. The
Company will furnish, or cause to be furnished, to XxxxxXxxx such information as
XxxxxXxxx 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 XxxxxXxxx of any change
that may be material in such Information. It is understood that
XxxxxXxxx 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.
d. During
the Authorization Period, the Company will not negotiate with any other
placement agent or underwriter with respect to a private or public offering of
the Company’s Securities.
e. The
Company will diligently and expeditiously prepare, in
conjunction with its legal counsel and accountants, the offering
documents required for any Financing. The offering documents shall substantially
conform in format, style and design models thereof provided to the Company by
XxxxxXxxx and shall have been completely reviewed as to substance by such
counsel and accountants based on substantially completed due diligence conducted
by them.
f. The
Company is not, and will not become, obligated to pay and has not obligated, and
will not obligate, XxxxxXxxx to pay any finder’s or brokerage fee in connection
with any Financing.
g. The
Company does not know of any facts adversely affecting its earnings or prospects
which have not been fully disclosed to XxxxxXxxx in writing and will promptly
advise XxxxxXxxx in writing of any material change in the business, operations,
assets or prospects of the Company which occurs subsequent to the date of this
Agreement.
h. All
provisions of each of the agreements specifically contemplated in this Agreement
will be in accordance with all applicable rules and regulations of the NASD and
all applicable laws.
6. Representations,
Warranties and Covenants of XxxxxXxxx. XxxxxXxxx represents and
warrants to, and covenants with, the Company as follows:
a. None
of XxxxxXxxx, its affiliates or any person acting on behalf of XxxxxXxxx 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.
x. XxxxxXxxx
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.
x. XxxxxXxxx
will send written materials related to a Financing only to persons that the
XxxxxXxxx reasonably believes are “accredited investors” (as defined under Rule
501(a) of the Securities Act).
x. XxxxxXxxx
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 XxxxxXxxx by the Company shall be held by XxxxxXxxx 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 in which the Company receives aggregate gross proceeds
of at least $7 million has been completed, then XxxxxXxxx shall have the right
for the 12-month period commencing on the date of the closing of such Financing,
to act as the managing placement agent in connection with the sale of equity or
equity-linked securities through a private placement.
10. Public
Offerings. If a Financing in which the Company receives aggregate
gross proceeds of at least $7 million has been completed, then, in the event
that at any time prior to the second anniversary of the closing date of such
Financing, the Company shall consummate a public offering that is managed or
co-managed by an investment banker introduced, directly or indirectly, to the
Company by XxxxxXxxx, XxxxxXxxx will be paid a finder’s fee at the closing of
such offering, equal to one percent (1%) of the gross proceeds to the Company of
such offering.
11. Advertisements. The
Company agrees that XxxxxXxxx has the right to place advertisements in financial
and other newspapers, journals, and websites at its own expense describing its
services to the Company hereunder. The foregoing shall also include
placement of a tombstone on the XxxxxXxxx corporate
website. Conversely, the Company agrees that it shall not use
XxxxxXxxx’x name, nor the name of any of its employees, representatives or
affiliates in any public manner without prior written consent from
XxxxxXxxx.
00. Survival
of Certain Provisions. The expense, indemnification, reimbursement,
advertisements, and contribution obligations of the Company provided herein and
in the attached Indemnification Agreement and XxxxxXxxx’x 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.
13. 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
the address set forth above, Attention: Chief Executive Officer; and (b) if to
XxxxxXxxx, to its office at 000 Xxxxxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx
00000, Attention: Xxxx X. Xxxxxxxxx.
00. Confidentiality.
No financial advice rendered by XxxxxXxxx pursuant to this Agreement may be
disclosed publicly in any manner without XxxxxXxxx’x 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, the Company shall provide XxxxxXxxx with
prompt notice thereof so that XxxxxXxxx 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, the Company will and
will cause its affiliates to disclose only that portion of such advice which the
Company is so required to disclose.
15. 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. The Company (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 XxxxxXxxx 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.
This Agreement may be assigned by
either party 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.
XxxxxXxxx is delighted to accept this
engagement and looks forward to working with you on this
assignment. Please confirm that the foregoing correctly sets forth
our agreement by signing and returning to XxxxxXxxx the enclosed duplicate copy
of this Agreement.
Very truly yours,
XxxxxXxxx Capital Partners
Inc.
By:
Name: Xxxx
X. Xxxxxxxxx
Title: Chief
Executive Officer
European American Equities,
Inc.
By:
Name: Xxxx
X. Xxxxxxxxx
Title: Chief
Executive Officer
ACCEPTED
AND AGREED TO
this 4th
day of February, 2008.
Sequiam
Corporation
By:
Name: Xxxx
X. Xxxxxxxxxxx
Title: Executive
Vice President and Chief
Financial
Officer
TO: XxxxxXxxx
Capital Partners Inc.
European American Equities,
Inc.
000 Xxxxxxx Xxxxxx
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 XxxxxXxxx
Capital Partners Inc. (“XxxxxXxxx” or “you”) and its affiliates, the respective
directors, officers, partners, agents and employees of XxxxxXxxx and its
affiliates, and each other person, if any, controlling XxxxxXxxx 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 XxxxxXxxx, we shall then establish
alternative means of providing for our obligations set forth herein on terms and
conditions reasonably satisfactory to XxxxxXxxx.
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,
Sequiam Corporation
By:__________________________
Name: Xxxx
X. Xxxxxxxxxxx
Title: Executive
Vice President and
Chief
Financial Officer
ACCEPTED
AND AGREED TO
this 4th
day of February, 2008
XxxxxXxxx
Capital Partners Inc.
By:
Name: Xxxx
X. Xxxxxxxxx
Title: Chief
Executive Officer
