[XXXXXX & XXXXXXX LOGO]
14 December 2006
STRICTLY CONFIDENTIAL
Xx Xxxxxxx Xxxxx
President and Chief Executive Officer
Star Energy Corporation
000 Xxxx Xxxxxx
00xx & 00xx Xxxxxx
Xxx Xxxx, XX 00000
Dear Xx Xxxxx:
This letter (the "Agreement") constitutes the agreement between Star
Energy Corporation (the "Company") and Xxxxxx & Xxxxxxx, LLC ("Xxxxxx") that
Xxxxxx shall serve as the exclusive placement agent (the "Services") for the
Company, on a "best efforts" basis, in connection with $20 million of the
proposed $30 million offer and placement (the Offering") by the Company of
securities of the Company (the "Securities").
The terms of the Offering and the Securities shall be a unit of Common
Stock in the Company at $2.00 along with a warrant exercisable at $3.50 for a
unit of Common Stock in the Company. It is the intention of the parties to the
Agreement to complete the Offering on or before 15, January 2007. The Company
expressly acknowledges and agrees that Xxxxxx'x obligations hereunder are on a
reasonable best efforts basis only and that the execution of this Agreement does
not constitute a commitment by Xxxxxx to purchase the Securities and does not
ensure the successful placement of the Securities or any portion thereof or the
success of Xxxxxx with respect to securing any other financing on behalf of the
Company.
A. Fees and Expenses. In connection with the Services described above, the
Company shall pay to Xxxxxx the following compensation:
1. Placement Agent's Fee. The Company shall pay to Rodman a cash
placement fee (the "Placement Agent's Fee") equal to 7% of the aggregate
purchase price paid by each purchaser of Securities that are placed in the
Offering.
2. Warrants. As additional compensation for the Services, the
Company shall issue to Xxxxxx or its designees at the closing of the Offering
(the "Closing"), warrants (the "Xxxxxx Warrants") to purchase that number of
shares of common stock of the Company ("Shares") equal to 7% of the aggregate
number of Shares placed in the Offering, plus any Shares underlying any
convertible Securities sold in the Offering. The Xxxxxx Warrants shall have the
same terms, including exercise price and registration rights as the warrants
issued to investors ("Investors") in the Offering. If no warrants are issued to
Investors, the Xxxxxx Warrants shall have an exercise price equal to 120% of the
price at which Shares are issued to Investors, an exercise period of five years
and registration rights for the Shares underlying the Xxxxxx Warrants equivalent
to those granted with respect to the Shares.
3. Expenses. In addition to any fees payable to Xxxxxx hereunder,
but only if an Offering is consummated, the Company hereby agrees to reimburse
Xxxxxx for all reasonable travel and other out-of-pocket expenses incurred in
connection with Xxxxxx'x engagement, including the reasonable fees and expenses
of Xxxxxx'x counsel. Such reimbursement shall be limited to $25,000 without
prior written approval by the Company.
0000 Xxxxxx xx xxx Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
X. Xxxx and Termination of Engagement. The term (the "Term") of Xxxxxx'x
engagement will begin on the date hereof and end on the earlier of the
consummation of the Offering or 15 days after the receipt by either party hereto
of written notice of termination; provided that no such notice may be given by
the Company for a period of 180 days after the date hereof. Notwithstanding
anything to the contrary contained herein, the provisions concerning
confidentiality, indemnification, contribution and the Company's obligations to
pay fees and reimburse expenses contained herein will survive any expiration or
termination of this Agreement.
C. Fee Tail. Xxxxxx shall be entitled to a Placement Agent's Fee and
Xxxxxx Warrants, calculated in the manner provided in Paragraph A, with respect
to any subsequent public or private offering or other financing or
capital-raising transaction of any kind ("Subsequent Financing") to the extent
that such financing or capital is provided to the Company by investors whom
Xxxxxx had introduced, directly or indirectly, to the Company during the Term,
if such Subsequent Financing is consummated at any time within the 18-month
period following the expiration or termination of this Agreement (the "Tail
Period").
D. Use of Information. The Company will furnish Rodman such written
information as Xxxxxx reasonably requests in connection with the performance of
its services hereunder. The Company understands, acknowledges and agrees that,
in performing its services hereunder, Xxxxxx will use and rely entirely upon
such information as well as publicly available information regarding the Company
and other potential parties to an Offering and that Xxxxxx does not assume
responsibility for independent verification of the accuracy or completeness of
any information, whether publicly available or otherwise furnished to it,
concerning the Company or otherwise relevant to an Offering, including, without
limitation, any financial information, forecasts or projections considered by
Xxxxxx in connection with the provision of its services.
E. Confidentiality. In the event of the consummation or public
announcement of any Offering, Xxxxxx shall have the right to disclose its
participation in such Offering, including, without limitation, the placement at
its cost of "tombstone" advertisements in financial and other newspapers and
journals. Xxxxxx agrees not to use any confidential information concerning the
Company provided to Xxxxxx by the Company for any purposes other than those
contemplated under this Agreement.
F. Securities Matters. The Company shall be responsible for any and all
compliance with the securities laws applicable to it, including Regulation D and
the Securities Act of 1933, and Rule 506 promulgated thereunder, and unless
otherwise agreed in writing, all state securities ("blue sky") laws. Xxxxxx
agrees to cooperate with counsel to the Company in that regard.
G. Company Acknowledgement. The Company acknowledges that the Offering of
convertible Securities may create significant risks, including the risk that the
Company may have insufficient cash resources and/or registered shares to timely
meet its payment and conversion obligations. The Company further acknowledges
that, depending on the number and price of new shares issued, such transaction
may result in substantial dilution which could adversely effect the market price
of the Company's shares.
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X. Xxxxxxxxx.
1. In connection with the Company's engagement of Xxxxxx as
placement agent, the Company hereby agrees to indemnify and hold harmless Xxxxxx
and its Affiliates, and the respective controlling persons, directors, officers,
shareholders, agents and employees of any of the foregoing (collectively the
"Indemnified Persons"), from and against any and all claims, actions, suits,
proceedings (including those of shareholders), damages, liabilities and expenses
incurred by any of them (including the reasonable fees and expenses of counsel),
(collectively a "Claim"), which are (A) related to or arise out of (i) any
actions taken or omitted to be taken (including any untrue statements made or
any statements omitted to be made) by the Company, or (ii) any actions taken or
omitted to be taken by any Indemnified Person in connection with the Company's
engagement of Xxxxxx, or (B) otherwise relate to or arise out of Xxxxxx'x
activities on the Company's behalf under Xxxxxx'x engagement, and the Company
shall reimburse any Indemnified Person for all expenses (including the
reasonable fees and expenses of counsel) incurred by such Indemnified Person in
connection with investigating, preparing or defending any such claim, action,
suit or proceeding, whether or not in connection with pending or threatened
litigation in which any Indemnified Person is a party. The Company will not,
however, be responsible for any Claim, which is finally judicially determined to
have resulted from the gross negligence or willful misconduct of any person
seeking indemnification for such Claim. The Company further agrees that no
Indemnified Person shall have any liability to the Company for or in connection
with the Company's engagement of Xxxxxx except for any Claim incurred by the
Company as a result of such Indemnified Person's gross negligence or willful
misconduct.
2. The Company further agrees that it will not, without the prior
written consent of Xxxxxx, settle, compromise or consent to the entry of any
judgment in any pending or threatened Claim in respect of which indemnification
may be sought hereunder (whether or not any Indemnified Person is an actual or
potential party to such Claim), unless such settlement, compromise or consent
includes an unconditional, irrevocable release of each Indemnified Person from
any and all liability arising out of such Claim.
3. Promptly upon receipt by an Indemnified Person of notice of any
complaint or the assertion or institution of any Claim with respect to which
indemnification is being sought hereunder, such Indemnified Person shall notify
the Company in writing of such complaint or of such assertion or institution but
failure to so notify the Company shall not relieve the Company from any
obligation it may have hereunder, except and only to the extent such failure
results in the forfeiture by the Company of substantial rights and defenses. If
the Company so elects or is requested by such Indemnified Person, the Company
will assume the defense of such Claim, including the employment of counsel
reasonably satisfactory to such Indemnified Person and the payment of the fees
and expenses of such counsel. In the event, however, that legal counsel to such
Indemnified Person reasonably determines that having common counsel would
present such counsel with a conflict of interest or if the defendant in, or
target of, any such Claim, includes an Indemnified Person and the Company, and
legal counsel to such Indemnified Person reasonably concludes that there may be
legal defenses available to it or other Indemnified Persons different from or in
addition to those available to the Company, then such Indemnified Person may
employ its own separate counsel to represent or defend him, her or it in any
such Claim and the Company shall pay the reasonable fees and expenses of such
counsel. Notwithstanding anything herein to the contrary, if the Company fails
timely or diligently to defend, contest, or otherwise protect against any Claim,
the relevant Indemnified Party shall have the right, but not the obligation, to
defend, contest, compromise, settle, assert crossclaims, or counterclaims or
otherwise protect against the same, and shall be fully indemnified by the
Company therefor, including without limitation, for the reasonable fees and
expenses of its counsel and all amounts paid as a result of such Claim or the
compromise or settlement thereof. In addition, with respect to any Claim in
which the Company assumes the defense, the Indemnified Person shall have the
right to participate in such Claim and to retain his, her or its own counsel
therefor at his, her or its own expense.
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4. The Company agrees that if any indemnity sought by an Indemnified
Person hereunder is held by a court to be unavailable for any reason then
(whether or not Xxxxxx is the Indemnified Person), the Company and Xxxxxx shall
contribute to the Claim for which such indemnity is held unavailable in such
proportion as is appropriate to reflect the relative benefits to the Company, on
the one hand, and Xxxxxx on the other, in connection with Xxxxxx'x engagement
referred to above, subject to the limitation that in no event shall the amount
of Xxxxxx'x contribution to such Claim exceed the amount of fees actually
received by Xxxxxx from the Company pursuant to Xxxxxx'x engagement. The Company
hereby agrees that the relative benefits to the Company, on the one hand, and
Xxxxxx on the other, with respect to Xxxxxx'x engagement shall be deemed to be
in the same proportion as (a) the total value paid or proposed to be paid or
received by the Company or its stockholders as the case may be, pursuant to the
Offering (whether or not consummated) for which Xxxxxx is engaged to render
services bears to (b) the fee paid or proposed to be paid to Xxxxxx in
connection with such engagement.
5. The Company's indemnity, reimbursement and contribution
obligations under this Agreement (a) shall be in addition to, and shall in no
way limit or otherwise adversely affect any rights that any Indemnified Party
may have at law or at equity and (b) shall be effective whether or not the
Company is at fault in any way.
I. Limitation of Engagement to the Company. The Company acknowledges that
Xxxxxx has been retained only by the Company, that Xxxxxx is providing services
hereunder as an independent contractor (and not in any fiduciary or agency
capacity) and that the Company's engagement of Xxxxxx is not deemed to be on
behalf of, and is not intended to confer rights upon, any shareholder, owner or
partner of the Company or any other person not a party hereto as against Xxxxxx
or any of its affiliates, or any of its or their respective officers, directors,
controlling persons (within the meaning of Section 15 of the Act or Section 20
of the Securities Exchange Act of 1934), employees or agents. Unless otherwise
expressly agreed in writing by Xxxxxx, no one other than the Company is
authorized to rely upon this Agreement or any other statements or conduct of
Xxxxxx, and no one other than the Company is intended to be a beneficiary of
this Agreement. The Company acknowledges that any recommendation or advice,
written or oral, given by Xxxxxx to the Company in connection with Xxxxxx'x
engagement is intended solely for the benefit and use of the Company's
management and directors in considering a possible Offering, and any such
recommendation or advice is not on behalf of, and shall not confer any rights or
remedies upon, any other person or be used or relied upon for any other purpose.
Xxxxxx shall not have the authority to make any commitment binding on the
Company. The Company, in its sole discretion, shall have the right to reject any
investor introduced to it by Xxxxxx. The Company agrees that it will perform and
comply with the covenants and other obligations set forth in the purchase
agreement and related transaction documents between the Company and the
investors in the Offering, and that Xxxxxx will be entitled to rely on the
representations, warranties, agreements and covenants of the Company contained
in such purchase agreement and related transaction documents as if such
representations, warranties, agreements and covenants were made directly to
Xxxxxx by the Company.
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J. Limitation of Xxxxxx'x Liability to the Company. Xxxxxx and the Company
further agree that neither Xxxxxx nor any of its affiliates or any of its their
respective officers, directors, controlling persons (within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act of 1934), employees or
agents shall have any liability to the Company, its security holders or
creditors, or any person asserting claims on behalf of or in the right of the
Company (whether direct or indirect, in contract, tort, for an act of negligence
or otherwise) for any losses, fees, damages, liabilities, costs, expenses or
equitable relief arising out of or relating to this Agreement or the Services
rendered hereunder, except for losses, fees, damages, liabilities, costs or
expenses that arise out of or are based on any action of or failure to act by
Xxxxxx and that are finally judicially determined to have resulted solely from
the gross negligence or willful misconduct of Xxxxxx.
K. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to agreements made
and to be fully performed therein. Any disputes which arise under this
Agreement, even after the termination of this Agreement, will be heard only in
the state or federal courts located in the City of New York, State of New York.
The parties hereto expressly agree to submit themselves to the jurisdiction of
the foregoing courts in the City of New York, State of New York. The parties
hereto expressly waive any rights they may have to contest the jurisdiction,
venue or authority of any court sitting in the City and State of New York. In
the event of the bringing of any action, or suit by a party hereto against the
other party hereto, arising out of or relating to this Agreement, the party in
whose favor the final judgment or award shall be entered shall be entitled to
have and recover from the other party the costs and expenses incurred in
connection therewith, including its reasonable attorneys' fees. Any rights to
trial by jury with respect to any such action, proceeding or suit are hereby
waived by Xxxxxx and the Company.
L. Notices. All notices hereunder will be in writing and sent by certified
mail, hand delivery, overnight delivery or telefax, if sent to Xxxxxx, to Xxxxxx
& Xxxxxxx, LLC, 0000 Xxxxxx xx xxx Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, XX 00000,
Telefax number (000) 000-0000, Attention: Xxxxxx Xxxxx, and if sent to the
Company, to Star Energy Corporation Telefax number (000) 000-0000, Attention: Xx
Xxxxxxx Xxxxx. Notices sent by certified mail shall be deemed received five days
thereafter, notices sent by hand delivery or overnight delivery shall be deemed
received on the date of the relevant written record of receipt, and notices
delivered by telefax shall be deemed received as of the date and time printed
thereon by the telefax machine.
M. Miscellaneous. This Agreement shall not be modified or amended except
in writing signed by Xxxxxx and the Company. This Agreement shall be binding
upon and inure to the benefit of both Xxxxxx and the Company and their
respective assigns, successors, and legal representatives. This Agreement
constitutes the entire agreement of Xxxxxx and the Company with respect to the
subject matter hereof and supersedes any prior agreements. If any provision of
this Agreement is determined to be invalid or unenforceable in any respect, such
determination will not affect such provision in any other respect, and the
remainder of the Agreement shall remain in full force and effect. This Agreement
may be executed in counterparts (including facsimile counterparts), each of
which shall be deemed an original but all of which together shall constitute one
and the same instrument.
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In acknowledgment that the foregoing correctly sets forth the
understanding reached by Xxxxxx and the Company, please sign in the space
provided below, whereupon this letter shall constitute a binding Agreement as of
the date indicated above.
Very truly yours,
XXXXXX & XXXXXXX, LLC
By __________________
Name:
Title:
Accepted and Agreed:
STAR ENERGY CORPORATION
By __________________
Name:
Title:
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