FINANCING & STRATEGIC ADVISORY AGREEMENT
EXHIBIT 10.1
▇▇. ▇▇▇
▇▇▇▇▇▇▇▇▇
Chairman
& CEO
EnterConnect,
Inc.
▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇
▇▇▇
▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
March 5,
2009
FINANCING
& STRATEGIC ADVISORY AGREEMENT
Pursuant
to our recent discussions, regarding possible financing and strategic
transactions, please find below a Financing & Strategic Advisory Agreement
(the “Agreement”) by and between EnterConnect Inc., a Nevada Corporation (the
“Company”), and ▇▇▇▇ ▇▇▇▇▇▇ Financial, Inc. (“the “Advisor”). The term Company
is understood to include any entity in which the Company has an ownership,
profits or similar interest, including any entity formed for the purpose of
facilitating a transaction, as well as any successor company.
Section
1. Engagement of
Advisor. The Company hereby engages the Advisor on a
non-exclusive basis to provide general investment banking and management
consulting services. The Company hereby engages the Advisor to provide
investment banking services, for the term of this Agreement, and the Advisor
hereby agrees, to advise, consult with, and assist the Company with the
identification and/or consummation of several types of transactions, including
but not limited to: (1) a transaction with an acquiror, acquisition target
company or merger partner, which is referred to as a “Merger Transaction”; (2) a
joint venture, corporate alliance, or licensing transaction to or from the
Company, which is referred to as a “Corporate Partnering Transaction” (a Merger
Transaction and a Corporate Partnering Transaction are sometimes defined herein,
and referred to for reasons of clarity, collectively as a “Strategic
Transaction”); (3) a sale of equity, equity-related or debt securities, which is
referred to as a “Financing Transaction”; and (4) a review of the Company’s
business, properties, operations and financial condition, including advising on
capitalization and recapitalization structures.
Section
2. Compensation. As
compensation for services rendered to the Company under this Agreement, the
Company shall pay to the Advisor the following compensation:
Section
2.1. Retainer
Fees. Retainer fees shall be payable to the Advisor by the
Company as follows:
(a) To
compensate the Advisor for general management consulting for the Company which
may include assistance in building and developing the Company in anticipation of
investment banking transactions, advising in matters related to share price
appreciation, assisting in the Company’s start-up activities, consulting on the
Company’s strategy and business development, leveraging the industry contacts
and network of the Advisor for the benefit of the Company, assisting in the
identification and recruiting of key personnel for the Company, reviewing the
Company’s scientific and technical matters, assisting in the development of the
Company’s business plan and forecasts, recommending Board member candidates for
the Company, recommending vendors and service companies, and other
non-investment banking activities:
(1) a general
management consulting fee of $5,000 shall be payable in cash within 10 business
days following the signing of this Agreement and shall be received by the
Advisor free of any wire transfer or other bank charges,
(2) a general
management consulting fee of 100,000 shares of the common stock of the Company
will be issued by the Company to the Advisor within 10 business days following
the signing of this Agreement. The common shares will be transferable to
directors, officers, independent contractors and employees of the Advisor. The
Advisor will have piggyback registration rights equal to the piggyback
registration rights granted to any other person in connection with any of the
transactions contemplated by this Agreement.
(b) To
compensate the Advisor for guidance with respect to Financing and Strategic
Transactions as required, at monthly intervals, a retainer payment of $15,000
per month, during the term of this Agreement, each such payment being referred
to as an "Advisory Fee", will be owed by the Company, to be paid to the Advisor
and will accrue, on the 20th day of the month in each month for which the
Advisory Fee is due, as short term debt. This fee is only payable if the Advisor
is requested in writing to raise additional capital the Company. The Advisory
Fee will bear interest at the rate of 10% per annum, and each month’s Advisory
Fee shall be represented by a promissory note (each, a “Fee Note”). Each Fee
Note will be due and payable as to principal and accrued and unpaid interest
upon the earlier of (i) six months from the issuance of the respective Fee Note
or (ii) the consummation of the Financing and/or Strategic
Transaction.
All of
the Fee Notes shall be repayable in cash and shall the proceeds therefrom shall
be received by the Advisor free of any wire transfer or other bank charges.
These payments are independent of and in addition to any payments due under any
other section in this Agreement.
For the
avoidance of doubt, the terms pursuant to which the Advisor shall raise
additional funds for the Company shall be governed by the Advisors customary
Placement Agreement, a form of which will be provided to the Company upon
request.
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Section
2.2. Success
Fee.
(a) The
Company agrees to pay the Advisor a fee upon the completion of any Financing
Transaction as set forth in Exhibit A hereto. The fee for any subsequent
Financing Transaction shall be determined as set forth in Exhibit A
hereto.
(b)
The
Company agrees to pay the Advisor a fee upon the completion of any Strategic
Transaction as set forth in Exhibit B hereto. The fee for any subsequent
Strategic Transaction shall be determined as set forth in Exhibit B
hereto.
Section
2.3. Written
Opinions. In the event that the Company desires to have the
Advisor furnish any formal written opinion as to the financial aspects of any
transaction, such as a fairness opinion or valuation, then such transactions
will be subject to a separate engagement.
Section
2.4. Expenses. The
Company will pay or reimburse the Advisor for all reasonable out-of-pocket costs
and expenses incurred by the Advisor (any individual expense not to exceed
$2,500 without prior written approval, including by email, from the Company)
solely in performing its obligations under this Agreement, which costs and
expenses shall include, but not be limited to, patent opinion by outside
counsel, if deemed necessary by the Advisor in its reasonable judgment (the
Company will directly engage and pay patent counsel for a second patent
opinion), travel expenses incurred in performing its duties, including due
diligence, in connection with this Agreement and possible transactions, legal
fees and expenses, costs of supplies, telecommunications and information
expenses, copying and mailing and all other expenses reasonably incurred by the
Advisor in performing its obligations under this Agreement. Reimbursable
expenses shall be payable in cash within 10 business days of the date of the
invoice, and shall be received by the Advisor free of any wire transfer or other
bank charges.
Section
2.5. Right of First
Refusal. The Advisor shall have a right of first refusal to
act as exclusive advisor for any Strategic Transaction conducted during the
first 12 months following the closing of any Financing, provided such Strategic
Transaction is introduced to the Company by the Advisor. The fee for any
subsequent Strategic Transactions shall be determined as set forth in Section
2.2.
Section
2.6. Fee
Tail. Advisor shall be entitled to the fees described herein,
including warrants, calculated in the manner provided herein with respect to any
subsequent Financing Transaction or Strategic Transaction of any kind (each, a
“Subsequent Transaction”) to the extent that such Subsequent Transaction is
between the Company, or any affiliate of the Company, and any “Commissionable
Party”, as defined below, 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”).
The term
“Commissionable Party” means (i) a natural person or an entity (each, a
“party”), with whom the Advisor has been in contact, has been introduced through
the efforts of the Advisor, or introduced through the use of any work products
or materials produced by the Advisor, directly or indirectly, during the term of
this Agreement or (ii) a party or parties, obtained by the Company during the
term of this Agreement who have been furnished any work products or materials
produced by the Advisor. If the Financing or Strategic Transaction has not been
consummated prior to the termination or expiration of this Agreement, the
Advisor and the Company shall prepare and deliver a mutually agreed upon list of
Commissionable Parties. Notwithstanding the foregoing, any list of
Commissionable Parties sent by the Advisor to the Company, if not objected to by
the Company in writing within 10 days after the receipt thereof, shall be deemed
to be mutually agreed upon.
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Section
3. Information. In
connection with a transaction contemplated by this Agreement, the Company will
cooperate with the Advisor and will furnish the Advisor with all information and
data concerning the Company, the transaction and such other information which
the Advisor and the Company deem appropriate (the “Information”) and will
provide the Advisor and any prospective counter party or investor with access to
the Company’s officers, directors, independent accountants and legal counsel.
The Company warrants and represents that, to the best of the Company’s
knowledge, all Information (a) provided or otherwise made available to the
Advisor by or on behalf of the Company or (b) contained in any information
memorandum, presentations, or business plans prepared by the Company with
respect to the proposed transaction will, at all times during the period of the
engagement of the Advisor hereunder, be correct in all material respects and
will not contain any untrue statement of a material fact or omit a material fact
necessary in order to make the statements therein not misleading in light of the
circumstances under which such statements are made. The Advisor acknowledges
that all of such Information is proprietary to the Company and agrees to keep
such Information confidential and not to disclose any of such Information to any
third party, except for third parties to whom the Advisor shall present such
Information for purposes of evaluation of a transaction pursuant to this
Agreement and to its financial and legal advisors.
The
Company further warrants and represents that any projections approved or
provided by it to the Advisor or contained in the information memorandum,
presentations, or business plans will have been prepared in good faith and will
be based upon assumptions which, in light of the circumstances under which they
are made, are reasonable. The Company acknowledges and agrees that in rendering
services hereunder, the Advisor will be using and relying upon the Information
(and information available from public sources and other sources deemed reliable
by the Advisor) without independent verification thereof by the Advisor or
independent appraisal by the Advisor of any of the Company’s
assets.
Section
4. Business
Practice. The Company recognizes that the Advisor is in the
business of advising and consulting with other businesses, some of which
businesses may be in competition with the Company. The Company acknowledges and
agrees that the Advisor may advise and consult with other businesses, including
those which may be in competition with the Company, and shall not be required to
devote its full time and resources to performing services on behalf of the
Company under this Agreement. The Advisor shall only be required to expend such
time and resources as are reasonably appropriate to advise and assist the
Company as provided for herein.
Section
5. Indemnification. (a)
The Company agrees to indemnify and hold harmless the Advisor and its
affiliates, agents, independent contractors and advisors, and their respective
directors, officers, employees, agents and controlling persons (each such person
is hereinafter referred to as an “JTF Indemnified Party”), from and against any
and all losses, claims, damages, liabilities and expenses whatsoever, joint or
several, to which any such JTF Indemnified Party may become subject under any
applicable federal or state law of the United States of America or otherwise,
caused by, relating to or arising out of the engagement evidenced hereby. The
Company will reimburse any JTF Indemnified Party for any expenses (including
reasonable attorney fees and expenses) as they are incurred by an JTF
Indemnified Party in connection with the investigation of, preparation for or
defense of any pending or threatened claim or any action or proceeding arising
therefrom, whether or not resulting in liability; provided, however, that at the
time of such reimbursement the JTF Indemnified Party shall have entered into an
agreement with the Company whereby the JTF Indemnified Party agrees to repay all
such reimbursed amounts if it is determined in a final, non-appealable judgment
by a court of competent jurisdiction that the JTF Indemnified Party is not
entitled to indemnity from the Company. Notwithstanding the foregoing, the
Company shall not be liable to any JTF Indemnified Party under the this Section
5(a) to the extent that (a) any loss, claim, damage, liability or expense is
determined in a final, non-appealable judgment by a court of competent
jurisdiction to result directly from any such JTF Indemnified Party's willful
misconduct or gross negligence or (b) to the extent that the Advisor is required
to indemnify the Company pursuant to Section 5(b) hereof.
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(b) The
Advisor agrees to indemnify and hold harmless the Company, and their affiliates,
agents, and advisors, and their respective directors, officers, employees,
agents and controlling persons (each individually a "Company Indemnified
Party"), from and against any and all losses, claims, damages, liabilities and
expenses whatsoever, joint or several, to which any such Company Indemnified
Party may become subject under any applicable federal or state law of the United
States of America or otherwise, caused by, relating to or arising out of the
Advisor's breach of a representation, warranty or covenant herein. The Advisor
will reimburse any Company Indemnified Party for all expenses (including
reasonable attorney fees and expenses) as they are incurred by such Company
Indemnified Party in connection with the investigation of, preparation for or
defense of any pending or threatened claim or any action or proceeding arising
therefrom, whether or not resulting in liability; provided, however, that at the
time of such reimbursement the Company Indemnified Party shall have entered into
an agreement with the Advisor whereby the Company Indemnified Party agrees to
repay all such reimbursed amounts if it is determined in a final, non-appealable
judgment by a court of competent jurisdiction that the Company Indemnified Party
is not entitled to indemnity from the Advisor. Notwithstanding the foregoing,
the Advisor shall not be liable to any Company Indemnified Party under this
section 5(b) to the extent that (a) any loss, claim, damage, liability or
expense is determined by a court of competent jurisdiction in a final,
non-appealable judgment to result directly from any such Company Indemnified
Party's willful misconduct or gross negligence, or (b) to the extent the Company
is required to indemnify the Advisor therefore pursuant to section 5(a)
hereof.
(c)
If for
any reason (other than a final non-appealable judgment finding any JTF
Indemnified Party or the Company or Company Indemnified Party (any such party,
an “Indemnified Party”) liable for losses, claims, damages, liabilities or
expenses for its gross negligence or willful misconduct) the foregoing indemnity
is unavailable to an Indemnified Party or insufficient to hold an Indemnified
Party harmless, then the other party shall contribute to the amount paid or
payable by an Indemnified Party as a result of such loss, claim, damage,
liability or expense in such proportion as is appropriate to reflect not only
the relative benefits received by the Company on the one hand and the Advisor on
the other, but also the relative fault by the Company, the Advisor and each
Indemnified Party, as well as any relevant equitable considerations, subject to
the limitation that in no event shall the total contribution of all JTF
Indemnified Parties to all such losses, claims, damages, liabilities or expenses
exceed the amount of fees actually received and retained by the Advisor
hereunder.
Section
6. Term of
Agreement. This Agreement shall terminate one (1) year after
the date hereof unless extended by mutual agreement. After the completion of the
first three (3) months of this Agreement, the Company may elect to terminate
this Agreement upon written 30 days advance notice to the Advisor. After the
completion of the first three (3) months of this Agreement, the Advisor may
elect to terminate this Agreement upon written 30 days advance notice to the
Company. Upon termination of this Agreement, neither party shall have any
further rights or obligations to the other, except that (i) the Company shall be
obligated to pay any unpaid fees under Section 2.1 hereof, (ii) the Company
shall continue to be bound by the provisions of Section 2.6 hereof, (iii) the
Company shall be obligated to reimburse expenses under Section 2.4 incurred by
the Advisor during the period prior to termination of this Agreement or related
to transactions continuing beyond termination of the Agreement, and (iv) the
Advisor and the Company shall continue to be bound by the provisions of Section
5 hereof.
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Section
7. Relationship of
Parties. The parties agree that their relationship under this
Agreement is an advisory relationship only, and nothing herein shall cause the
Advisor to be partners, agents or fiduciaries of, or joint venturers with, the
Company or with each other.
Section
8. Notices. All
notices required or permitted herein must be in writing and shall be deemed to
have been duly given the first business day following the date of service if
served personally, on the first business day following the date of actual
receipt if delivered by telecopier, telex or other similar communication to the
party or parties to whom notice is to be given, or on the third business day
after mailing if mailed to the party or parties to whom notice is to be given by
registered or certified mail, return receipt requested, postage prepaid, as
follows:
If to the
Advisor:
▇▇▇▇
▇▇▇▇▇▇ Financial, Inc.
▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇
▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
Director
of Compliance
Telefax
number (▇▇▇) ▇▇▇ ▇▇▇▇
With a
copy to:
▇▇▇▇▇▇▇
▇▇▇▇▇▇ & ▇▇▇▇ LLP
Two Grand
Central Tower
▇▇▇ ▇▇▇▇
▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇
▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Telefax
number (▇▇▇) ▇▇▇-▇▇▇▇
If to the
Company:
EnterConnect,
Inc.
▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇
▇▇▇
▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
▇▇. ▇▇▇ ▇▇▇▇▇▇▇▇▇, Chairman and CEO
Telefax
number: [insert]
With a
copy to:
▇▇▇▇▇▇
English Duma LLP
▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇
▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇, Esq.
Telefax
Number: (▇▇▇) ▇▇▇-▇▇▇▇
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or to
such other individuals and addresses as either party hereto may designate to the
other by notice from time to time for this purpose.
Section
9. Parties. This
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective successors and assigns.
Section
10. Arbitration, Choice of Law;
Costs. This Agreement shall be governed and construed in
accordance with the laws of the State of New York applicable to agreements made
and to be performed within such State, without regard to principles of conflict
of laws. Any disputes, controversies or claims (“Disputes”) arising out of or
relating to this Agreement, or the breach thereof, shall be referred to a sole
arbitrator selected in accordance with the rules of the American Arbitration
Association (“AAA”) sitting in New York, New York and enforcement of and/or
challenges to any determination made by such arbitrators shall be determined in
accordance with the laws of the State of New York. Any award issued by the AAA
shall be final and binding, and judgment upon the award rendered may be entered
in any court having jurisdiction. Neither party may seek punitive damages and
any and all requests for supporting documentation or depositions may only be
granted upon determination of the arbitrator. Such arbitration shall
be the exclusive method of resolving Disputes. Without limiting the generality
of the foregoing, the parties expressly waive resort to any judicial or other
mechanism for the enforcement of any rights and remedies under this Agreement,
except to the extent that judicial relief may be sought solely to compel a party
to this Agreement to abide by the exclusive means of dispute resolution set
forth herein. Notwithstanding the foregoing, the parties agree that to the
extent that actions or inactions by either party may expose either party to
irreparable harm, that either party shall be allowed to protect its rights
through application to appropriate State and/or Federal courts for Temporary
Restraining Orders pending arbitration resolution. Each party shall
be liable for their own costs and expenses related to the arbitration, including
attorneys’ fees.
Section
11. Entire Agreement,
Waiver. This Agreement constitutes the entire Agreement
between the parties hereto and supersedes all prior Agreements relating to the
subject matter hereof. This Agreement may not be amended or modified in any way
except by subsequent Agreement executed in writing. Either the Company or the
Advisor may waive in writing any term, condition, or requirement under this
Agreement which is intended for its own benefit, and written waiver of any
breach of such term or condition of this Agreement shall not operate as a waiver
of any other breach of such term or condition, nor shall any failure to enforce
any provision hereof operate as a waiver of such provision or of any other
provision hereof.
Section
12. Public
Announcements. If the Company completes a Strategic
Transaction and/or Financing Transaction in any form, the Company and the
Advisor shall mutually agree as to suitable wording that describes the advisory
role played by the Advisor, for inclusion in the Advisor’s and/or Company’s
press releases concerning the Strategic Transaction and/or Financing
Transaction.
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Section
13. Execution in
Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, and all of which taken together
shall constitute one and the same agreement (and all signatures need not appear
on anyone counterpart). In the event that any signature is delivered by
facsimile transmission or by e-mail delivery of a data file, such signature
shall create a valid and binding obligation of the party executing (or on whose
behalf such signature is executed) with the same force and effect as if such
facsimile or e-mail signature page were an original thereof. This Agreement
shall become effective when one or more counterparts has been signed and
delivered by each of the parties hereto.
Section
14. Severability. If
any provision of this Agreement is held to be illegal, invalid or unenforceable
under any present or future laws, such provision shall be fully severable. This
Agreement shall be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part of this Agreement, and the
remaining provisions of this Agreement shall remain in full force and effect and
shall not be affected by the illegal, invalid or unenforceable provision or by
its severance from this Agreement. Furthermore, in lieu of each such illegal,
invalid or unenforceable provision there shall be deemed added automatically as
a part of this Agreement a provision as similar in terms to such illegal,
invalid or unenforceable provision as may be possible to cause such provision to
be legal, valid and enforceable.
Section
15. Interpretation. The
parties hereto have participated jointly in the negotiating and drafting of this
Agreement. If an ambiguity or a question of intent or interpretation arises,
this Agreement shall be construed as if drafted jointly by the parties, and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Agreement.
Section
16. Headings. The
captions and headings used in this Agreement are for convenience only and do not
in any way affect, limit, amplify or modify the terms and provisions of this
Agreement.
[SIGNATURE
PAGE FOLLOWS]
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IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day
and year first above written.
▇▇▇▇
▇▇▇▇▇▇ Financial, Inc. (“Advisor”)
By: /s/
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Name:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title:
Chief Executive Officer
EnterConnect,
Inc. (“Company”)
By: /s/
▇▇▇ ▇▇▇▇▇▇▇▇▇
Name: ▇▇▇
▇▇▇▇▇▇▇▇▇
Title:
Chairman and Chief Executive Officer
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EXHIBIT A - FINANCING FEES
|
|
A.
1.
|
Fee for Equity or
Equity Equivalent Financing (“Equity
Financing”).
|
In the
event the Company consummates any Equity Financing of its equity or equity
equivalent securities, pursuant to the terms of this Agreement, regardless of
the size of the transaction, the Company shall pay to the Advisor a fee equal to
(a) thirteen percent (13%) of the aggregate gross proceeds of each Equity
Financing. Any fee payable to the Advisor shall be paid in cash to the Advisor
by the Company at the closing of the transaction and shall be received by the
Advisor free of any wire transfer or other bank charges. At the closing, the
Advisor shall also be granted a five-year cashless warrant or option for shares
or an equivalent interest equal to fifteen percent (15%) of the value of any
Equity Financing at a price equal to the effective price of the financing and
will contain customary provisions, including those pertaining to anti-dilution,
demand and piggyback registration rights including: (i) exercisable at any time
before the fifth anniversary of the closing of a Transaction, (ii) transferable
to directors, officers, independent contractors and employees of the Advisor,
and (iii) grant the advisor registration rights equal to the registration rights
granted to investors in the Equity Financing. For the avoidance of doubt, the
number of warrants to be issued to the Advisor by the Company will be determined
by multiplying the warrant success fee, 15%, times the aggregate gross proceeds
of the Equity Financing divided by the per share common stock equivalent price
utilized for the Equity Financing. The exercise price of each warrant granted to
the Advisor shall be equal to 100% of the per share common stock equivalent
price used to calculate the number of warrants as described above.
For the
purposes of this Agreement, equity securities shall be deemed to include any
form of common or preferred stock or any security or instrument, including debt,
which is directly or through warrants, options, or similar instruments,
convertible into, or exchangeable for, equity securities of the
Company.
In the
event any consideration is agreed to be paid in connection with the Equity
Financing at closing and/or over a period of time following the closing, the
Advisor shall be paid its fee with respect to that future consideration as and
when it is paid to the Company, subject to the Company first meeting its
obligation to pay the full minimum fee to the Advisor at closing.
|
|
A.3
|
Fee
for Public Offering
|
If the
Company undertakes a public offering of its debt or equity securities within the
term of this agreement (12 months) the Advisor will serve as lead manager and
the Company shall pay to the Advisor (a) a fee equal to ten percent (10%), and
(b) a non-accountable expense allowance equal to three percent (3%), each of the
aggregate gross proceeds of each equity Financing Transaction. Any fee and
expense allowance payable to the Advisor shall be paid in cash to the Advisor by
the Company at the closing of the transaction and shall be received by the
Advisor free of any wire transfer or other bank charges. At the closing, the
Advisor shall also be granted a five-year cashless warrant or option for shares
or an equivalent interest equal to ten percent (15%) of the value of any Private
Equity Financing at a price equal to the effective price of the Financing and
will contain customary provisions, including those pertaining to anti-dilution,
demand and piggyback registration rights including: (i) exercisable at any time
before the fifth anniversary of the closing of a Transaction, (ii) transferable
to directors, officers, independent contractors and employees of the Advisor,
and (iii) grant the advisor piggyback registration rights equal to the piggyback
registration rights granted to investors in the public offering. For
the avoidance of doubt, the number of warrants to be issued to the Advisor by
the Company will be determined by multiplying the warrant success fee, 15%,
times the aggregate gross proceeds of the Private Equity Financing divided by
the per share common stock equivalent price utilized for the Private Equity
Financing. The exercise price of each warrant granted to the Advisor shall be
equal to 100% of the per share common stock equivalent price used to calculate
the number of warrants as described above. Advisor may reallocate its share the
investment banking fees with a co-manager and to allow the co-manager to receive
a customary percentage of the fees. Such fees, underwriting spreads, expense
reimbursements and other transaction costs may reflect negotiations with an
underwriting group for which the Advisor will act as lead manager.
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For the
purposes of this Agreement, equity securities shall be deemed to include any
form of common or preferred stock or any security or instrument, including debt,
which is directly or through warrants, options, or similar instruments,
convertible into, or exchangeable for, equity securities of the
Company.
In the
event any consideration is agreed to be paid in connection with the Equity
Financing at closing and/or over a period of time following the closing, the
Advisor shall be paid its fee with respect to that future consideration as and
when it is paid to the Company, subject to the Company first meeting its
obligation to pay the full minimum fee to the Advisor at closing.
The full
terms of the relationship between the Advisor and the Company in connection with
any such public offering shall be governed by the provisions of an Underwriting
Agreement containing terms customary to a transaction of this type.
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A.2.
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Fee for Debt Financing
(“Debt Financing”).
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In the
event the Company consummates any Debt Financing of its debt securities,
pursuant to the terms of this Agreement, regardless of the size of the
transaction, the Company shall pay to the Advisor a fee equal to (a) eight
percent (8%) of the aggregate gross proceeds of each Debt Financing if the
aggregate gross proceeds are less than or equal to $10 million, provided that
the minimum fee for such debt financing be $250,000; (b) six and one-half
percent (6.5 %) of the aggregate gross proceeds of each Debt Financing if the
aggregate gross proceeds are greater than $10 million but less than or equal to
$15 million; and (c) five percent (5%) of the aggregate gross proceeds of each
Debt Financing if the aggregate gross proceeds are greater than $15 million. Any
fee payable to the Advisor shall be payable in cash to the Advisor by the
Company at the closing of the transaction and shall be received by the Advisor
free of any wire transfer or other bank charges.
In the
event any consideration is agreed to be paid in connection with the Debt
Financing at closing and/or over a period of time following the closing, the
Advisor shall be paid its fee with respect to that future consideration as and
when it is paid to the Company, subject to the Company first meeting its
obligation to pay the full minimum fee to the Advisor at closing.
Initials
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EXHIBIT B
- STRATEGIC TRANSACTION FEES
In the
event the Company consummates any Strategic Transaction (except with respect to
a Merger Transaction or a Corporate Partnering Transaction, as further set forth
below) involving the Company and a counter party, regardless of the size of the
transaction, the Company shall pay to the Advisor a fee with respect to such
transaction equal to a percentage amount of the Transaction Value (as defined
below) paid or received by the Company in the transaction, which percentage
amount shall be 5% of the first $7.5 million or portion thereof of the
Transaction Value, 4% of the next $7.5 million or portion thereof of the
Transaction Value, 3% of the next $10 million or portion thereof of the
Transaction Value, and 2% of the balance of the Transaction Value, provided that
the minimum fee for each transaction will be: (a) $350,000 for a Merger
Transaction, (b) $200,000 for a Corporate Partnering Transaction.
As used
herein, “Transaction Value” shall include (i) cash paid in the transaction, (ii)
the fair market value of any securities issued, as shall be mutually agreed upon
at the closing of the Transaction, (iii) the fair market value of any other
property transferred in connection with the transaction, as mutually determined
by the parties. If the parties cannot come to such mutual determination, the
fair market value described above shall be determined by arbitration, (iv)
balance sheet indebtedness assumed in connection with the transaction, (v) cash
or the fair market and/or net present value of property paid to any officers,
directors, employees or affiliates as consideration for any covenant not to
compete or similar agreement related to the transaction (excluding options
issued to management as part of ongoing employment or consulting arrangements),
as mutually determined by the parties. If the parties cannot come to such mutual
determination, the fair market and/or net present value described above shall be
determined by arbitration, and (vi) the fair market and/or net present value of
all technology access/license fees, R&D support payments and science/
regulatory/clinical development or commercialization milestone bonus payments to
the Company by a counter party or the converse, as mutually determined by the
parties. If the parties cannot come to such mutual determination, the fair
market and/or net present value described above shall be determined by
arbitration.
In the
event any contingent consideration is agreed to be paid in connection with the
Strategic Transaction (such as, for example, consideration payable upon the
fulfillment of some condition or event which may or may not occur in the
future), then such contingent consideration shall be included in the Transaction
Value, and the Advisor shall be paid its fee with respect to that contingent
consideration as and when it is paid, subject to the Company first meeting its
obligation to pay the full minimum fee to the Advisor at closing.
For the
avoidance of doubt, if the upfront Transaction Value (as defined by the total of
the upfront components, (i) through (vi), of Transaction Value) available to the
Company at the closing of a transaction trigger a minimum fee (i.e., $350,000
for a Merger Transaction and $200,000 for a Corporate Partnering Transaction),
the minimum fee will paid to the Advisor at closing. Any subsequent proceeds to
the Company will not trigger additional success fee payments to the Advisor
until the cumulative Transaction Value multiplied by the applicable success fees
exceeds the minimum fee already paid, after which the success fees of any
incremental proceeds received by the Company will be paid to the Advisor when
received by the Company.
Initials
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