November 3, 2005
STRICTLY CONFIDENTIAL
Xx. Xxxx Xxxxxxx
Chairman
FP Technology Holding, Inc.
0000 Xxxxxxxx Xxxx, Xxxxx 000 Xxxx
Xxxxxxx Xxxxx, XX 00000
Ladies and Gentlemen:
The undersigned individuals (the "Management Group") jointly and severally
agree to retain Xxxxxx & Xxxxxxx, LLC ("Xxxxxx"), as of the date hereof, as
their exclusive agent to arrange and carry out, on a "best efforts" basis, a
Collateralized Acquisition PoolTM (CAPTM) Investment Vehicle offering (the
"Offering") of securities (the "Securities") issued by a corporation to be
identified by the parties hereto (the "Company") and each member of the
Management Group shall be jointly and severally liable for the Management
Group's obligations hereunder. Xxxxxx shall be authorized to use sub-placement
agents, provided that the use of any sub-placement agent by Xxxxxx shall not
increase any fees (including cash or warrants) or expenses payable by the
Management Group under this Agreement. The Management Group will take all such
action as may be within their power to cause the Company to enter into a
placement agent agreement in the form attached hereto as Annex B (the "PAA"). To
the extent that the Company fulfills any obligation of the Management Group with
respect to a particular transaction pursuant to the PAA, the Management Group
shall be relieved of such obligation. Upon the execution of the PAA, Paragraphs
A1, A2, A4, A5, and E of this Agreement shall become null and void, and the
Management Group shall have no further obligations under such Paragraphs of this
Agreement. Notwithstanding the preceding sentence hereof, all other Paragraphs,
terms, and conditions of this Agreement shall remain in full force and effect.
The parties hereto acknowledge that the precise form of the Offering has not yet
been determined and that any element thereof is subject to change prior to the
execution of agreements setting forth definitive terms. The Securities may
include debt, equity and convertible securities and any combination thereof. All
decisions, permissions, instructions and consents of the Management Group shall
be communicated to Xxxxxx by one individual indicated by the Management Group on
the signature page hereof (the "Representative") and Xxxxxx shall be entitled to
rely upon any communication received from the Representative. In the event of
the death or incompetence of the Representative, the remaining members of the
Management Group shall designate a successor Representative in writing to
Xxxxxx. This agreement shall hereinafter be referred to as the "Agreement".
A. Fees and Expenses. In consideration for Xxxxxx'x services in analyzing
and organizing a possible Offering (the "Services"), the Management Group shall
pay to Xxxxxx the following compensation:
1. Placement Agent's Fee. The Management Group shall pay to Rodman a
cash placement fee (the "Placement Agent's Fee") equal to 6% of the aggregate
purchase price paid by each purchaser of Securities that are placed in the
Offering. The Placement Agent's Fee equal to 1.5% of the gross proceeds of the
Offering will be deducted at the closing of the Offering (the "Closing") from
the gross proceeds of the securities sold. Following the Closing, immediately
upon the release of any funds from the controlled account/trust account agreed
to by the Investors (as defined below) and the Company (the "Controlled
Account"), an amount equal to 4.5% of the amount released from the Controlled
Account shall be paid to Xxxxxx.
2. Warrants. As additional compensation for the Services, the
Management Group shall cause the Company to issue to Xxxxxx or its designees, at
the Closing, warrants (the "Xxxxxx Warrants") to purchase that number of shares
of common stock of the Company ("Shares") equal to 10% of the aggregate number
of Shares placed in the Offering, plus any Shares underlying any convertible
Securities, warrants, and units sold in the Offering. The Xxxxxx Warrants shall
have the same terms (other than forced exercise provisions, if any), 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 the terms equivalent to those of any other
convertible securities issued to Investors, and if no convertible securities are
issued, the Xxxxxx Warrants shall have an exercise price equal to 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, if
an Offering is not consummated, the Management Group hereby agrees to reimburse
Xxxxxx for all reasonable travel and other out-of-pocket expenses (supported by
receipts/invoices) incurred in connection with Xxxxxx'x engagement, including
the reasonable fees and expenses of Xxxxxx'x counsel. Such reimbursement shall
be limited to $50,000 without prior written approval by the Management Group,
and $25,000 of such amount shall be paid to Xxxxxx upon the execution of this
Agreement.
4. M&A Fee. In the event that the Company consummates an Offering,
and thereafter or concurrently therewith the Company engages in any transaction
involving a purchase or sale of assets or outstanding stock or a merger,
acquisition or other business combination (each, a "Transaction") during the
Term or the Tail Period (as defined in Paragraph D), the Management Group shall
pay to Rodman a cash fee ("M&A Fee") equal to 3% of the Aggregate Consideration
upon the closing of the Transaction. "Aggregate Consideration" shall mean the
aggregate value of any cash consideration paid, any securities issued, any other
non-cash consideration paid, the net present value of any deferred consideration
paid, and any debt financing provided to the company the stock, debt or assets
of which are acquired (the "Acquired Company"), its stockholders, affiliates or
subsidiaries in connection with a Transaction, and the principal amount of all
indebtedness of the Acquired Company (or its respective stockholders, affiliates
or subsidiaries) which is assumed, retired, left outstanding (but excluding
amounts owed to stockholders of the Acquired Company), or for which an exchange
occurs in connection with such Transaction.
5. Warrant Exercise Fee. The Management Group shall pay to Xxxxxx a
fee of 5% of the exercise price of each warrant issued to the investors in the
Offering which is exercised hereafter, within ten days of the Company's receipt
of the exercise price.
B. No-Shop. Other than as set forth on Attachment I hereto, until the
Offering contemplated hereby is completed, but no later than 60 days from the
date hereof (the "No-Shop Period"), the Management Group agrees that without the
prior written approval of Xxxxxx, they will not, and will not permit any of
their employees, agents or representatives, directly or indirectly, to solicit,
encourage, initiate, enter into, continue or participate in any negotiations or
discussions with, or provide any information to, any third party concerning any
public or private offering or other financing or capital-raising transaction of
any kind, including but not limited to a "CAP", a "SPAC", a "PIPE", a merger
with a public company, or an initial public offering of securities, if such
transaction involves a member of the Management Group in any manner whatsoever.
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X. Xxxx and Termination of Engagement. Except as set forth below, 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 receipt by either
party hereto of written notice of termination; provided that no such notice may
be given by the Management Group during the No-Shop Period. Notwithstanding any
such expiration or termination, Paragraphs D through N shall survive and remain
in full force and effect and be binding on the parties hereto.
D. 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 Management Group or to any
member thereof or to any entity in which any member of the Management Group, or
any member of his or her family, owns an interest, directly or indirectly (a
"Management Entity"), by investors whom Xxxxxx had introduced, directly or
indirectly, to the Management Group during the Term (such investors shall be
agreed upon by Xxxxxx and the Management Group and listed on Attachment II
hereto, which Attachment may be revised from time to time upon the agreement of
Xxxxxx and the Management Group) if such Subsequent Financing is consummated at
any time within (i) the 18-month period following the consummation of the
Offering and (ii), if no Offering shall have been consummated during the Term,
the 18-month period following the expiration or termination of this Agreement
(the "Tail Period"). Whether or not an Offering is consummated during the Term,
the Management Group shall pay to Xxxxxx an M&A Fee, calculated in the manner
provided in Paragraph A, with respect to any Transaction consummated with any
member of the Management Group or a Management Entity, during the Term or the
Tail Period, with a party introduced by Xxxxxx during the Term.
E. Future Transactions. If, at any time during the Term, or within the
18-month period following consummation of any Offering during the Term, the
Company or any of its subsidiaries (i) decides to dispose of or acquire business
units or acquire any of its outstanding securities or make any exchange or
tender offer or enter into a merger, consolidation or other business combination
or any recapitalization, reorganization, restructuring or other similar
transaction, including, without limitation, an extraordinary dividend or
distributions or a spin-off or split-off, and the Company decides to retain a
financial advisor for such transaction, Xxxxxx (or any affiliate designated by
Xxxxxx) shall have the right to act as the Company's financial advisor for any
such transaction; or (ii) decides to finance or refinance any indebtedness using
a manager or agent, Xxxxxx (or any affiliate designated by Xxxxxx) shall have
the right to act as a manager, placement agent or lead agent with respect to
such financing or refinancing; or (iii) decides to raise funds by means of a
public offering or a private placement of equity or debt securities using an
underwriter or placement agent, Xxxxxx (or any affiliate designated by Xxxxxx)
shall have the right to act as an underwriter, initial purchaser or placement
agent for such financing. The Company shall give written notice to Xxxxxx of
each such decision and, if Xxxxxx responds in writing within 10 business days
(the "Response Period") that it wishes to exercise its rights under this
Paragraph E, the Company shall notify Xxxxxx in writing regarding the terms (the
"Engagement Terms") of the proposed engagement. If Xxxxxx or one of its
affiliates decides to accept any such engagement, the agreement governing such
engagement will contain, among other things, provisions for customary fees for
transactions of similar size and nature and the provisions of this Agreement,
including indemnification, which are appropriate to such a transaction. If
Xxxxxx notifies the Company in writing that it does not wish to exercise its
rights under this Paragraph E, or fails to respond in writing within the
Response Period that it wishes to exercise such rights, the Company shall have
the right to retain any other person or persons to provide such services on the
Engagement Terms.
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F. Use of Information. The Management Group will furnish Rodman such
written information as Xxxxxx reasonably requests in connection with the
performance of its Services hereunder. The Management Group understands,
acknowledges and agrees that, in performing Xxxxxx'x Services hereunder, Xxxxxx
will use and rely entirely upon such information as well as publicly available
information regarding the Management Group 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 Management Group
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.
G. 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. The parties hereto have executed a confidentiality agreement which
will survive the execution of this Agreement.
H. Securities Matters. The Management Group 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 Management Group in
that regard.
I. Indemnity. Xxxxxx and the Management Group agree to the indemnification
provisions as set forth in Annex A attached hereto.
J. Limitation of Engagement to the Management Group. The Management Group
acknowledges that Xxxxxx has been retained only by the Management Group, that
Xxxxxx is providing services hereunder as an independent contractor (and not in
any fiduciary or agency capacity) and that the Management Group's engagement of
Xxxxxx is not deemed to be on behalf of, and is not intended to confer rights
upon, any Affiliate of the Management Group 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 Management Group is authorized to rely upon this Agreement or
any other statements or conduct of Xxxxxx, and no one other than the Management
Group is intended to be a beneficiary of this Agreement. The Management Group
acknowledges that any recommendation or advice, written or oral, given by Xxxxxx
to the Management Group in connection with Xxxxxx'x engagement is intended
solely for the benefit and use of the Management Group'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 Management Group.
The Management Group, in their sole discretion, shall have the right to reject
any investor introduced to them by Xxxxxx.
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K. Limitation of Xxxxxx'x Liability to the Management Group. Xxxxxx and
the Management Group 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 Management Group or any
person asserting claims on behalf of or in the right of the Management Group
(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.
L. 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.
M. 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,
Attention: Xxxxxx Xxxxx, Telefax number (000) 000-0000, with a copy to Black &
Associates, 000 Xxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxx, XX 00000, Telefax number
(000) 000-0000, Attention: Xxxxx X. Xxxxx, Esq., and if sent to any member of
the Management Group, will be mailed, delivered or telefaxed and confirmed to
the address and fax number set forth on the signature page hereof. 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.
N. Miscellaneous. This Agreement shall not be modified or amended except
in writing signed by Xxxxxx and the Management Group. This Agreement shall be
binding upon and inure to the benefit of Xxxxxx, the Management Group and their
respective assigns, successors, and legal representatives. This Agreement,
including Annex A and Annex B hereto, constitutes the entire agreement of Xxxxxx
and the Management Group 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.
**The next page is the signature page**
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In acknowledgment that the foregoing correctly sets forth the
understanding reached by Xxxxxx and the Management Group, 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 /s __________________________
Name:
Title:
Accepted and Agreed:
/s/ Xxxx Xxxxxxx
---------------------------------------
Manager and Representative
Name: Xxxx Xxxxxxx
Address: FP Technology Holding, Inc.
0000 Xxxxxxxx Xxxx, Xxxxx 000 Xxxx
Xxxxxxx Xxxxx, XX 00000
Fax: 000-000-0000
/s/ Xxxx Xxxxx
----------------------------------------
Manager
Name: Xxxx Xxxxx
Address: 000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Fax: 000-000-0000
Attachment
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Attachment I
Paragraph B of the Agreement shall not apply to the transactions and/or entities
described below:
7
Attachment II
The investors covered by Paragraph D of the Agreement are listed below:
8
[Xxxxxx & Xxxxxxx Letterhead]
Annex A
November 3, 2005
Xxxxxx & Xxxxxxx, LLC
0000 Xxxxxx xx xxx Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxx, III, President
Gentlemen:
In connection with our engagement of Xxxxxx & Xxxxxxx, LLC ("Xxxxxx") as
our agent, we hereby agree jointly and severally to indemnify and hold harmless
Xxxxxx and its affiliates, and the respective controlling persons, directors,
officers, shareholders, sub-placement agents, 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 Management Group or
the Company, or (ii) any actions taken or omitted to be taken by any Indemnified
Person in connection with our engagement of Xxxxxx, or (B) otherwise relate to
or arise out of Xxxxxx'x activities on our behalf under Xxxxxx'x engagement, and
we 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. We 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. We further agree that no Indemnified Person
shall have any liability to us for or in connection with our engagement of
Xxxxxx except for any Claim incurred by us as a result of such Indemnified
Person's gross negligence or willful misconduct.
We further agree that we 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 hereunder from any
and all liability arising out of such Claim.
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
us in writing of such complaint or of such assertion or institution but failure
to so notify us shall not relieve us from any obligation we may have hereunder,
except and only to the extent such failure results in the forfeiture by us of
substantial rights and defenses. If we so elect or are requested by such
Indemnified Person, we 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
us, 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 us, then such Indemnified Person may
employ its own separate counsel to represent or defend him, her or it in any
such Claim and we shall pay the reasonable fees and expenses of such counsel.
Notwithstanding anything herein to the contrary, if we fail 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 us 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 we assume
the defense, the Indemnified Person shall have the right to participate in such
Claim and to retain its own counsel therefor at its own expense.
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We agree 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), we 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 us, 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 us and the
Company pursuant to Xxxxxx'x engagement. We hereby agree that the relative
benefits to us, 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 us and the Company as the
case may be, pursuant to the Offering (whether or not consummated) for which you
are engaged to render services bears to (b) the fee paid or proposed to be paid
to Xxxxxx in connection with such engagement.
Our 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 we are at fault in any way.
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The provisions of this Agreement shall remain in full force and effect
following the completion or termination of Xxxxxx'x engagement.
Very truly yours,
Accepted and Agreed:
---------------------------------------
Manager and Representative
Name: Xxxx Xxxxxxx
Address: FP Technology Holding, Inc.
0000 Xxxxxxxx Xxxx, Xxxxx 000 Xxxx
Xxxxxxx Xxxxx, XX 00000
Fax: 000-000-0000
----------------------------------------
Manager
Name: Xxxx Xxxxx
Address: 000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Fax: 000-000-0000
Confirmed and agreed to as of the date hereof:
Xxxxxx & Xxxxxxx, LLC
By: _____________________
Name:
Title:
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Annex B
[Xxxxxx & Xxxxxxx Letterhead]
November 3, 2005
STRICTLY CONFIDENTIAL
Xx. Xxxx Xxxxxxx
Chairman
FP Technology Holding, Inc.
0000 Xxxxxxxx Xxxx, Xxxxx 000 Xxxx
Xxxxxxx Xxxxx, XX 00000
Dear Xx. Xxxxxxx:
This letter (the "Agreement") constitutes the agreement between FP
Technology Holding, Inc. (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 the proposed offer
and private placement (the "Offering") by the Company of securities of the
Company, including debt, equity and convertible securities (the "Securities").
Xxxxxx shall be authorized to use sub-placement agents, provided that the use of
any sub-placement agent by Xxxxxx shall not increase any fees (including cash or
warrants) or expenses payable by the Company under this Agreement.
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 6% of the aggregate
purchase price paid by each purchaser of Securities that are placed in the
Offering. The Placement Agent's Fee equal to 1.5% of the gross proceeds of the
Offering will be deducted at the closing of the Offering (the "Closing") from
the gross proceeds of the Securities sold. Following the Closing, immediately
upon the release of any funds from the controlled account/trust account agreed
to by the Investors (as defined below) and the Company (the "Controlled
Account"), an amount equal to 4.5% of the amount released from the Controlled
Account shall be paid to Xxxxxx.
2. Warrants. As additional compensation for the Services, the
Company shall issue to Xxxxxx or its designees at the Closing, warrants (the
"Xxxxxx Warrants") to purchase that number of shares of common stock of the
Company ("Shares") equal to 10% of the aggregate number of Shares placed in the
Offering, plus any Shares underlying any convertible Securities, warrants, and
units sold in the Offering. The Xxxxxx Warrants shall have the same terms (other
than forced exercise provisions, if any), 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
the terms equivalent to those of any other convertible securities issued to
Investors, and if no convertible securities are issued, the Xxxxxx Warrants
shall have an exercise price equal to 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.
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3. Expenses. In addition to any fees payable to Xxxxxx hereunder, if
an Offering is consummated, the Company hereby agrees to reimburse Xxxxxx for
all reasonable travel and other out-of-pocket expenses (supported by
receipts/invoices) incurred in connection with Xxxxxx'x engagement, including
the reasonable fees and expenses of Xxxxxx'x counsel. Such reimbursement shall
be limited to $50,000 without prior written approval by the Company.
4. M&A Fee. In the event that the Company consummates the Offering
and, thereafter or concurrently therewith the Company engages in any transaction
involving a purchase or sale of assets or outstanding stock or a merger,
acquisition or other business combination (each, a "Transaction") during the
Term or the Tail Period (as defined in Paragraph D), the Company shall pay to
Rodman a cash fee ("M&A Fee") equal to 3% of the Aggregate Consideration upon
the closing of the Transaction. "Aggregate Consideration" shall mean the
aggregate value of any cash consideration paid, any securities issued, any other
non-cash consideration paid, the net present value of any deferred consideration
paid, and any debt financing provided to the company the stock, debt or assets
of which are acquired (the "Acquired Company"), its stockholders, affiliates or
subsidiaries in connection with a Transaction, and the principal amount of all
indebtedness of the Acquired Company (or its respective stockholders, affiliates
or subsidiaries) which is assumed, retired, left outstanding (but excluding
amounts owed to stockholders of the Acquired Company), or for which an exchange
occurs in connection with such Transaction.
5. Warrant Exercise Fee. The Company shall pay to Xxxxxx a fee of 5%
of the exercise price of each warrant issued to the investors in the Offering
which is exercised hereafter, within ten days after the Company's receipt of the
exercise price.
B. No-Shop. Until the Offering contemplated hereby is completed, but no
later than 60 days from the date hereof (the "No-Shop Period"), the Company
agrees that without the prior written approval of Xxxxxx, it will not, and will
not permit any of its shareholders, members, officers, employees, directors,
agents or representatives to, directly or indirectly, solicit, encourage,
initiate, enter into, continue or participate in any negotiations or discussions
with, or provide any information to, any third party concerning any public or
private offering or other financing or capital-raising transaction of any kind,
including but not limited to a "CAP", a "SPAC", a "PIPE", a merger with a public
company, or an initial public offering of securities.
X. Xxxx and Termination of Engagement. Except as set forth below, 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 receipt by either
party hereto of written notice of termination; provided that no such notice may
be given by the Company during the No-Shop Period. Notwithstanding any such
expiration or termination, Paragraphs D through N shall survive and remain in
full force and effect and be binding on the parties hereto.
D. 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, or to any entity
controlling, controlled by or under common control with the Company (an
"Affiliate"), by investors whom Xxxxxx had introduced, directly or indirectly,
to the Company during the Term (such investors shall be agreed upon by Xxxxxx
and the Company and listed on Attachment I hereto, which Attachment may be
revised from time to time upon the agreement of Xxxxxx and the Company) if such
Subsequent Financing is consummated at any time within (i) the 18-month period
following the consummation of the Offering and (ii), if no Offering shall have
been consummated during the Term, the 18-month period following the expiration
or termination of this Agreement (the "Tail Period"). If no Offering is
consummated during the Term, the Company shall pay to Xxxxxx an M&A Fee,
calculated in the manner provided in Paragraph A, with respect to any
Transaction consummated by the Company or any Affiliate during the Term or the
Tail Period with a party introduced by Xxxxxx during the Term.
13
E. Future Transactions. If, at any time during the Term, or within the
18-month period following consummation of any Offering during the Term, the
Company or any of its subsidiaries (i) decides to dispose of or acquire business
units or acquire any of its outstanding securities or make any exchange or
tender offer or enter into a merger, consolidation or other business combination
or any recapitalization, reorganization, restructuring or other similar
transaction, including, without limitation, an extraordinary dividend or
distributions or a spin-off or split-off, and the Company decides to retain a
financial advisor for such transaction, Xxxxxx (or any affiliate designated by
Xxxxxx) shall have the right to act as the Company's financial advisor for any
such transaction; or (ii) decides to finance or refinance any indebtedness using
a manager or agent, Xxxxxx (or any affiliate designated by Xxxxxx) shall have
the right to act as a manager, placement agent or lead agent with respect to
such financing or refinancing; or (iii) decides to raise funds by means of a
public offering or a private placement of equity or debt securities using an
underwriter or placement agent, Xxxxxx (or any affiliate designated by Xxxxxx)
shall have the right to act as an underwriter, initial purchaser or placement
agent for such financing. The Company shall give written notice to Xxxxxx of
each such decision and, if Xxxxxx responds in writing within 10 business days
(the "Response Period") that it wishes to exercise its rights under this
Paragraph E, the Company shall notify Xxxxxx in writing regarding the terms (the
"Engagement Terms") of the proposed engagement. If Xxxxxx or one of its
affiliates decides to accept any such engagement, the agreement governing such
engagement will contain, among other things, provisions for customary fees for
transactions of similar size and nature and the provisions of this Agreement,
including indemnification, which are appropriate to such a transaction. If
Xxxxxx notifies the Company in writing that it does not wish to exercise its
rights under this Paragraph E, or fails to respond in writing within the
Response Period that it wishes to exercise such rights, the Company shall have
the right to retain any other person or persons to provide such services on the
Engagement Terms.
F. 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.
G. 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. The parties hereto have executed a confidentiality agreement which
will survive the execution of this Agreement.
14
H. 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.
I. Indemnity. Xxxxxx and the Company agree to the indemnification
provisions as set forth in Annex A attached hereto.
J. 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.
K. 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.
L. 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.
M. 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,
Attention: Xxxxxx Xxxxx, Telefax number (000) 000-0000, with a copy to Black &
Associates, 000 Xxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxx, XX 00000, Telefax number
(000) 000-0000, Attention: Xxxxx X. Xxxxx, Esq., and if sent to the Company,
will be mailed, delivered or telefaxed and confirmed to _______________,
_______________, Telefax number _______________, Attention: Mr. _______________,
_______________. 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.
15
N. 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,
including Annex A hereto, constitutes the entire agreement of Xxxxxx and the
Company with respect to the subject matter hereof and supersedes any prior
agreements. For the avoidance of doubt, this Agreement shall not supersede any
similar agreement with any shareholder or other party directly or indirectly
affiliated with the Company. 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.
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:
FP TECHNOLGOY HOLDING, INC.
By __________________________
Name:
Title:
Attachment
16
Attachment I
The following investors are covered by Paragraph D of the Agreement: (i) all of
the investors listed on Attachment II to the Agreement dated ________, 2005
among Xxxxxx and the Management Group consisting of ____________________,
____________________, ____________________, and (ii) the investors listed below.
17
A-1
Annex A
November 3, 2005
Xxxxxx & Xxxxxxx, LLC
0000 Xxxxxx xx xxx Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxx, III, President
Gentlemen:
In connection with our engagement of Xxxxxx & Xxxxxxx, LLC ("Xxxxxx") as
our placement agent, we hereby agree to indemnify and hold harmless Xxxxxx and
its affiliates, and the respective controlling persons, directors, officers,
shareholders, sub-placement agents, 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 our engagement of Xxxxxx, or (B) otherwise relate to or arise out of
Xxxxxx'x activities on our behalf under Xxxxxx'x engagement, and we 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. We 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. We further agree that no Indemnified Person shall have any liability
to us for or in connection with our engagement of Xxxxxx except for any Claim
incurred by us as a result of such Indemnified Person's gross negligence or
willful misconduct.
We further agree that we 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 hereunder from any
and all liability arising out of such Claim.
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
us in writing of such complaint or of such assertion or institution but failure
to so notify us shall not relieve us from any obligation we may have hereunder,
except and only to the extent such failure results in the forfeiture by us of
substantial rights and defenses. If we so elect or are requested by such
Indemnified Person, we 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
us, 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 us, then such Indemnified Person may
employ its own separate counsel to represent or defend him, her or it in any
such Claim and we shall pay the reasonable fees and expenses of such counsel.
Notwithstanding anything herein to the contrary, if we fail 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 us 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 we assume
the defense, the Indemnified Person shall have the right to participate in such
Claim and to retain its own counsel therefor at its own expense.
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We agree 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), we 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 us, 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 us pursuant to
Xxxxxx'x engagement. We hereby agree that the relative benefits to us, 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 us or our stockholders as the case may be, pursuant to
the Offering (whether or not consummated) for which you are engaged to render
services bears to (b) the fee paid or proposed to be paid to Xxxxxx in
connection with such engagement.
Our 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 we are at fault in any way.
The provisions of this Agreement shall remain in full force and effect
following the completion or termination of Xxxxxx'x engagement.
Very truly yours,
FP Technology Holding, Inc.
By: _____________________
Name:
Title:
Confirmed and agreed to as of the date hereof:
Xxxxxx & Xxxxxxx, LLC
By: _____________________
Name:
Title:
19
