Exhibit 10.4
NYGS New York Global Securities
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Global Investment Banking, Securities, & Financial Services
Member NASD, AIPC
February 7, 2006
Mr. Bon Xxxx Xx
Chief Executive Officer and President
Sorell, Inc.
Buk-ri 00, Xxxx-Xxxx
Xxxxxx Xxxx, Xxxxx Xxxxx
Dear Mr. Ku:
This letter agreement (the "Agreement") confirms our complete understanding with
respect to the retention of New York Global Securities, Incorporated ("NYGS") as
exclusive financial advisor and placement agent in connection with the placement
(the "Placement") of certain securities (the "Securities") of Sorell, Inc. (the
"Company").
Upon the terms and subject to the conditions set forth hereinafter, the
parties hereto agree as follows:
1. APPOINTMENT. The Company hereby retains NYGS and NYGS hereby agrees to
act as the Company's placement agent in connection with the Placement.
2. SCOPE AND CERTAIN CONDITIONS OF SERVICES. The Company expressly
acknowledges and agrees the obligations of NYGS hereunder are on a reasonable
best efforts basis only and that the execution of the Agreement does not
constitute a commitment by NYGS to purchase the Securities and does not ensure
the successful placement of the Securities or any portion thereof, or the
success of securing any other financing on behalf of the Company.
3. FEES. In consideration for the services rendered by NYGS in connection
with the Placement, the Company agrees to pay NYGS the following fees:
(a) A success fee (the "Success Fee") equal to 12.0% of the gross
proceeds from the sale of Securities in the Placement. The Success Fee
is due and payable to NYGS immediately upon the closing of the
Placement and shall be disbursed directly to NYGS simultaneously with
the delivery of the proceeds of the Placement to the Company.
(b) Non-callable warrants of the Company (the "Placement Agent
Warrants") issuable to NYGS, or its designee simultaneously with the
closing of the Placement, to purchase 20.0% of the aggregate number of
Securities sold in the Placement. The Placement Agent Warrants shall
entitle the holder thereof to purchase securities of the Company at a
purchase price per share equal to the price of the Securities sold in
the Placement and shall be exercisable for a period of three years
after the closing of the Placement. The Placement Agent Warrants shall
be satisfactory in form and substance to NYGS and its counsel and
shall contain provisions for, among other things, cashless exercise,
and anti-dilution protection in the event of merger,
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consolidation, reclassification, reorganization and other similar
events, but not in the event of subsequent sales of securities by the
Company.
4. In addition to any fees that may be payable to NYGS hereunder, the
Company shall reimburse NYGS for its out-of-pocket expenses incurred in
connection with its engagement hereunder, including the reasonable fees and
expenses of its legal counsel. If any expenses have not previously been
reimbursed at the time this Agreement terminates, the Company shall promptly
reimburse NYGS for any such expenses incurred or accrued prior to termination.
5. Following a Placement of a minimum of $1.5 million, to the extent that,
at any time during the term of this Agreement or the 18 month period following
the Placement, the Company determines to raise debt, equity or equity-linked
securities via a public offering or private placement, pursue a merger,
acquisition or divestiture, or otherwise, or require other investment banking
services, then NYGS shall have the first right of refusal, but not the
obligation, to act as the Company's exclusive placement agent, lead manager,
financial advisor or dealer-manager, as appropriate, in each case pursuant to a
separate engagement letter which shall provide for, among other things, mutually
acceptable terms, conditions, indemnification and compensation for such
services.
6. None of the advice, either oral or written, provided to the Company by
NYGS hereunder shall be publicly disclosed or made available to third parties
without the prior written consent of NYGS, which consent shall not be
unreasonably withheld, except the information may be disclosed (i) to the
Company's counsel, accountants and other advisors having a need to know, (ii) in
the course of any litigation or court proceeding involving the Company
including, without limitation, the enforcement of any claim against the Company,
whether inside or outside the context of a bankruptcy proceeding, (iii) as the
Company reasonably believes to be otherwise required by law pursuant to legal
process or any judicial, administrative, legislative, regulatory or
self-regulatory body or committee having, or claiming to have, jurisdiction over
the proposed Placement or the Company, or any other governmental agency or
representative thereof, (iv) in the event that the Company is requested (by oral
questions, deposition, interrogatories, requests for information or documents,
subpoena, court order, civil investigative demand or other process) to disclose
such information. If the Company is requested pursuant to clause (iv) to
disclose any information, the Company will (x) give NYGS prompt notice of such
request so that NYGS may seek an appropriate protective order and (y) consult
with NYGS as to the advisability of taking legally available steps to resist or
narrow such a request. The Company will cooperate fully with NYGS in obtaining
such an order. If in the absence of a protective order the Company is
nonetheless compelled to disclose information, NYGS agrees that it may make such
disclosure without liability hereunder, provided that it gives NYGS written
notice of the information to be disclosed as far in advance of its disclosure as
is practicable and, upon NYGS' request and at its expense, uses its best efforts
to obtain reasonable assurances that confidential treatment will be accorded to
such information. All references to the Company in this paragraph shall be
deemed to include their representatives.
7. Recognizing that transactions of the type contemplated in this engagement
sometimes result in litigation and that the role of NYGS is advisory, the
Company
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agrees to indemnify and hold harmless NYGS, its affiliates and their respective
officers, directors, employees, agents and controlling persons within the
meaning of Section 15 of the Securities Act of 1933, as amended (the "Act") or
Section 20(a) of the Securities Exchange Act of 1934, as amended (an
"Indemnified Party" or collectively, the "Indemnified Parties"), from and
against any and all loss, charge, claim, damage, expense and liability
whatsoever, including, but not limited to, all attorneys fees and expenses
(hereinafter a "Claim" or "Claims"), related to or arising in any manner out of,
based upon, or in connection with (i) any untrue statement or alleged untrue
statement of a material fact in any offering document provided by the Company
relating to any capital raising assignment performed by NYGS on behalf of the
Company or any omission or alleged omission of the Company to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, or (ii) any transaction contemplated by the engagement of NYGS
hereunder (items (i) and (ii) being hereinafter referred to as a "Matter" or
"Matters"), and will promptly reimburse the Indemnified Parties for all expenses
(including reasonable fees and expenses of legal counsel) as incurred in
connection with the investigation of, preparation for or defense of any pending
or threatened Claim related to or arising in any manner out of any Matter
hereunder, or any action or proceeding arising therefrom (collectively,
"Proceedings"), whether or not such Indemnified party is a formal party to any
such Proceeding. Notwithstanding the foregoing, the Company shall not be liable
in respect of any Claims that a court of competent jurisdiction has judicially
determined by final judgment (in connection with which the time to appeal has
expired or the last right of appeal has been denied) resulted solely from the
gross negligence or willful misconduct of an Indemnified Party. The Company
further agrees that it will not, without the prior written consent of NYGS
settle compromise or consent to the entry of any judgment in any pending or
threatened proceeding in respect of which indemnification may be sought
hereunder (whether or not NYGS or any Indemnified Party is an actual or
potential party to such Proceeding), unless such settlement, compromise or
consent includes an unconditional release of NYGS and each other Indemnified
Party hereunder from all liability arising out of such proceeding.
In order to provide for just and equitable contribution in any case in which an
Indemnified Party is entitled to indemnification pursuant to this Agreement but
it is judicially determined by the entry of a final judgment decree by a court
of competent jurisdiction and the time to appeal has expired or the last right
of appeal has been denied) that such indemnification may not be enforced in such
case, the Company shall contribute to the aggregate losses, Claims, damages
and/or liabilities in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand, and NYGS on the other, from
the Transaction. Notwithstanding the foregoing, NYGS shall not be obligated to
contribute any amount hereunder that exceeds the amount of fees received by NYGS
under this Agreement.
The Company further agrees that no Indemnified Party shall have any liability
(whether direct or indirect, in contract or tort or otherwise) to the Company
for or in connection with NYGS' engagement hereunder except for Claims that a
court of competent jurisdiction shall have determined by final judgment (in
connection with which the time to appeal has expired or the last right of appeal
has been denied) resulted solely from the gross negligence or willful misconduct
of such Indemnified Party. The indemnity, reimbursement and contribution
obligations of the Company
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set forth herein shall be in addition to any liability which the Company may
otherwise have and shall be binding upon and inure to the benefit of any
successors, assigns, heirs and personal representatives of the Company or an
Indemnified Party.
The indemnity, reimbursement and contribution provisions set forth herein 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 Matter
referred to herein, (ii) any investigation made by or on behalf of any party
hereto or any person controlling (within the meaning of Section 15 of the
Securities act of 1933 as amended, or Section 20 of the Securities Exchange Act
of 1934, as amended) any party hereto, (iii) any termination or the completion
or expiration of this Agreement with NYGS and (iv) whether or not NYGS shall, or
shall not be called upon to, render any formal or informal advice in the course
of such engagement.
8. (a) Subject to (b) and (c) below, the engagement of NYGS pursuant to
this Agreement shall automatically terminate six months from the date
of this Agreement or the date set forth in a termination notice
delivered by either party to the other in accordance with the
provisions set forth below. This Agreement may be extended if agreed
to in writing by both parties.
(b) The Company may terminate this Agreement upon 30 days written
notice to NYGS.
(c) NYGS may terminate this Agreement upon 30 days written notice to
the Company without further liability or obligation on the part of
NYGS.
9. (a) This Agreement sets forth the entire understanding of the parties
relating to the subject matter hereof, and supersedes and cancels any
prior communications, understanding and agreements between the
parties. This Agreement cannot be modified or changed, nor can any of
its provisions be waived, except in writing signed by both parties.
(b) Any term or condition of this Agreement which is prohibited or
unenforceable in any applicable jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof;
and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other
jurisdiction. To the extent permitted by any applicable law, the
Company hereby waives any provisions of such applicable law which
render any provisions hereof prohibited or unenforceable in any
respect.
10. (a) This Agreement shall be governed by and construed in accordance
with the laws of the State of New York, including all matters of
construction, validity and performance.
(b) Any dispute arising out of or relating to this Agreement or its
performance that the parties are unable to resolve by agreement shall
be finally settled by arbitration. Such arbitration shall be effected
in accordance with the Rules of
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Conciliation and Arbitration of the International Chamber of
Commerce and shall be conducted in New York. Judgment upon the award
rendered by the Arbitrator may be entered in any court having
jurisdiction thereof. The arbitrator shall have the discretion to
award counsel fees and costs to the prevailing party.
NYGS 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 the enclosed duplicate of this letter in the space
provided and returning it, whereupon this letter shall constitute a binding
agreement as of the date first above written.
NEW YORK GLOBAL SECURITIES, INC.
By: _________________________
Name: ______________________
Title: _______________________
Agreed to and accepted as of the date
first above written:
SORELL, INC.
By: ______________________________
Name: ____________________________
Title: _____________________________
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