Re: Retainer Agreement Between Commonwealth Associates, L.P. and Teton Energy Corporation (the “Company”)
Exhibit 10.4
Commonwealth Associates | 000 Xxxxx Xxxxxx · Xxx Xxxx, XX 00000 | |
Investment & Merchant Banking · Member NASD/SIPC | xxx.xxxxxxxxxxxxxxxxxxxxxx.xxx | |
Tel: 000-000-0000 · 000-000-0000 | ||
July 1, 2007
Re: | Retainer Agreement Between Commonwealth Associates, L.P. | |||
and Teton Energy Corporation (the “Company”) |
Gentlemen:
Commonwealth Associates, L.P., and any of its subsidiaries or affiliates (“COMW” unless
otherwise indicated), is pleased to submit this letter of engagement (the “Agreement”) setting
forth the terms and conditions whereby COMW will act as financial advisor and will provide general
financial advisory and investment banking services to the Company.
I. | Services To Be Provided |
Subject to the terms of that certain Placement Agent Agreement dated as of May 11, 2007
between the Company and COMW (the “May 11 Agreement”) with respect to transaction advisor services,
COMW will endeavor to provide to the Company general financial advisory and investment banking
services in connection with identifying, assessing, evaluating, and if appropriate, executing
possible acquisition, divestiture, exchange, merger, sale, restructuring, financing, refinancing or
other transactions, involving the Company, its assets, and/or its securities, and one or more
third-parties (the “Advisory Services”).
II. | Terms and Conditions |
A. | Authority. The Company represents and warrants that the Company is in all respects qualified and authorized to accept any financing or merger/acquisition commitments being arranged by COMW; provided, however, that the Company can decide not to accept any financing or merger/acquisition commitments being arranged by COMW, in the Company’s sole discretion. COMW is not responsible for the qualifications of the Company, the vesting or quality of title or any other matters’ affecting the consummation of such transaction. | ||
B. | Company Information. The Company represents and warrants that all information (i) made available to COMW by the Company or (ii) contained in the relevant financing documents will be complete and correct 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 the light of the circumstances under which such statements are made. The Company further represents and warrants that any projections provided to COMW or contained in any relevant transaction documents will have been prepared in good faith and will be based on assumptions that, in light of the circumstances under which they are made, are reasonable. The Company acknowledges and agrees that, in rendering its services hereunder, COMW will be using and relying on such information (and additional information available from public or other sources) without independent verification, that COMW will not assume responsibility for the accuracy or completeness of such information (included in the relevant financing documents or otherwise), and that COMW will not undertake to make an independent appraisal of any of the assets of the Company or any of its subsidiaries. |
III. | Compensation/Payment For Services |
As compensation for COMW’s services, the Company will pay, or cause to be paid, the following
fees to COMW:
A. | Compensation to COMW: |
1. | A non-refundable Monthly Fee (the “Monthly Fee”) of $15,000, payable monthly beginning July 1, 2007 continuing until the expiration of the Agreement as described in Section IV.A, below. | ||
2. | If the Monthly Fee is not fully paid net 30 days after receipt, the Company agrees to pay all costs of collection, including but not limited to attorney’s fees and interest on the obligation, whether collected by suit or otherwise. The Monthly Fee is not negotiable and is not subject to any reduction, set-off, counterclaim, or refund for any reason or matter whatsoever. | ||
3. | In addition to the Monthly Fee, 1% of the aggregate sale price for the monetization of partial or full ownership of selected oil and gas assets, payable on the closing date of such sale. The Company and COMW hereby acknowledge and agree that such 1% fee constitutes a one time modification to the May 11 Agreement with respect to transaction advisor compensation payable to COMW, and |
that except for such modification, the terms of the May 11 Agreement are hereby reaffirmed. |
B. | Expenses. In addition to the fees described above, and whether or not any financing is consummated, the Company will pay all of COMW’s reasonable out-of-pocket expenses, including travel for trips approved by the Company, Federal Express and other mailing charges, long distance telephone calls, and other incremental costs incurred, including pre-approved fees and disbursements of counsel (which approval will not be unreasonably withheld). COMW must seek pre-approval for any single item costing in excess of $1,000. Out-of-pocket expenses will be billed, due and payable, monthly in arrears. |
IV. | Miscellaneous |
A. | Term. This Agreement is effective as of July 1, 2007 (the “Effective Date”) and will continue thereafter for a period of 24 months. The Company may accelerate payments, in part or in full, at its option. | ||
B. | Confidentiality. Except as contemplated by the terms hereof or as required by applicable law, COMW shall keep confidential all material non-public information provided to it by the Company, and shall not disclose such information to any third party, other than such of its employees and advisors as COMW determines to have a need to know and except as otherwise required by law or legal process. The relevant financing documents and any other information or data about the Company, its subsidiaries, or their assets will only be made available to a potential investor on the execution of a confidentiality agreement prepared by COMW and acceptable to the Company. | ||
C. | Nature of Engagement. Pursuant to the May 11 Agreement, COMW is being retained to serve as the Company’s exclusive transaction advisor (unless otherwise agreed to in writing between the parties) solely to the Company, and the engagement of COMW shall not be deemed to be on behalf of and is not intended to confer rights or benefits on any shareholder or creditor of the Company or its subsidiaries or on any other person. Unless expressly agreed to in writing by COMW, no one other than the Company is authorized to rely on this engagement of COMW or any statements, conduct or advice of COMW. No option or advice of COMW shall be used for any other purpose or reproduced, disseminated, quoted, or referred to at any time, in any manner or for any purpose, nor shall any |
public or other references to COMW (or to such opinions or advice) be made without the express prior written consent of COMW, which consent shall not be unreasonably withheld. | |||
D. | No Obligation to Consummate a Transaction. Nothing herein shall obligate the Company to close on any financing or other transaction introduced to it by COMW. | ||
E. | Parties. This Agreement shall be binding on the parties and their successors and assigns. | ||
F. | Modifications and Amendments. This Agreement and the May 11 Agreement represent the entire understanding between the Company and COMW with respect to the Advisory Services. It is understood that COMW’s obligations under this Agreement are to use its best efforts throughout the period for which it acts as the Company’s transaction advisor as described herein. COMW’s engagement is not intended to provide the Company or any other person or entity with any assurances that any transaction will be consummated. It is further understood that except for the modification of the May 11 Agreement set forth in Section III.A.3 above, the terms of the May 11 Agreement are hereby reaffirmed. | ||
G. | Arbitration. Any dispute related to this Agreement, any transaction contemplated hereby, or any other matter contemplated hereby shall be settled by arbitration in accordance with the rules then in effect of the Financial Institutions Regulatory Authority (f/k/a NASD). Any award entered by the arbitrators shall be final, binding, and nonappealable, and judgment may be entered thereon by any party in accordance with applicable law in any court of competent jurisdiction. This arbitration provision shall be specifically enforceable. | ||
H. | Governing Law & Amendments. This Agreement shall be governed by New York law, without application of conflict of laws principles, and may not be amended or modified except pursuant to a writing signed by all parties. |
[Remainder of page intentionally left blank.]
If the foregoing correctly sets forth the entire understanding and agreement between COMW and
the Company, please so indicate in the space provided for that purpose below and return an executed
copy to us no later than September 4, 2007, whereupon this letter shall constitute a binding
agreement between us as of the date first above written.
COMMONWEALTH ASSOCIATES, L.P. | ||||||
By: | /s/ Xxxxxx X. X’Xxxxxxxx | |||||
Xxxxxx X. X’Xxxxxxxx | ||||||
President & CEO | ||||||
AGREED: | ||||||
TETON ENERGY CORPORATION | ||||||
By:
|
/s/ Xxxx X. Xxxxxx | |||||
Xxxx X. Xxxxxx | ||||||
President & CEO |