Exhibit 10.15
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ENGAGEMENT AGREEMENT
August 10, 2001
The purpose of this letter ("Agreement") is to define the agreement between
XxxxxXxxx Capital Partners LLC, a limited liability company, with offices at 00
X. 00xx Xxxxxx, Xxxxx 000, Xxx Xxxx, Xxx Xxxx 00000, its subsidiaries,
successors and affiliates ("XxxxxXxxx" "we" or "our"), and C5 Technologies,
Inc., a Utah corporation, with an address at 0000 Xxxxx Xxxxxxx Xxxx., Xxxxx
000, Xxxx Xxxx Xxxx, Xxxx 00000, its subsidiaries, successors and affiliates
(the "Company," "you" or "your").
XxxxxXxxx shall collaborate with the Company to promote and finance the business
of the Company, and to act as your exclusive investment banker for the purpose
of rendering to you financial advice and other services in such capacity, on the
terms and conditions hereinafter set forth. Our engagement shall become
effective as of the date set forth below.
1. Transaction
XxxxxXxxx along with its Advisory Board and extensive professional network will
participate actively to establish the business of the Company through XxxxxXxxx
Capital Partners LLC, and will assist the Company with strategic alliances,
corporate finance and strategy, business development, international expansion,
human resources, as well as insurance and legal matters. These activities will
be divided into two phases. Phase One will involve a minimum raise of $1,500,000
- $2,000,000 in bridge financing to be completed thirty (30) days from the date
of the offering memorandum. Phase Two will involve an additional amount of $5 -
10,000,000, the Phase Two Financing, and shall be completed ninety (90) days
from the date of the offering memorandum, unless extended by mutual agreement
for an additional sixty (60) days.
2. Corporate and Financial Advisory Services
XxxxxXxxx will advise and assist the Company in the preparation of a corporate
development strategy as well as negotiate with potential capital sources, merger
and/or acquisition candidates, and joint venture partners. All decisions with
respect to potential transactions, however, will remain the sole responsibility
and determination of the Company. XxxxxXxxx will, further, assist and advise the
Company in the Company's preparation of any letters of intent, agreements,
documents or materials that XxxxxXxxx, in its sole discretion, deems appropriate
to assess and achieve the corporate and financing objectives of the Company
("Materials"). It is understood that the Materials will be based upon
assumptions and information provided by the Company or contracted third parties,
that XxxxxXxxx will not be required to make or be responsible for any
independent analysis or investigation of any information provided by the
Company, and that XxxxxXxxx is entitled to rely thereon.
It is further agreed that XxxxxXxxx assumes no responsibility or liability as to
the truth, accuracy or completeness of such information which the Company
herewith warrants to XxxxxXxxx, and that XxxxxXxxx shall have the right to make
appropriate disclaimers to any Materials with respect thereto. Although
XxxxxXxxx shall conduct a due diligence review and make suggestions regarding
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the Materials, the contents, including but not limited to the completeness,
truth and accuracy thereof, are the sole responsibility of the Company and are
not that of XxxxxXxxx.
3. Engagement Fee for Advisory Services
In addition to any amounts payable pursuant to Paragraph 7 hereof, a
nonrefundable engagement fee for the corporate and financial advisory services
to be provided by XxxxxXxxx, as hereunder set forth, ("Advisory Fee") is due and
payable as per the following:
Phase One: 100,000 cashless warrants to purchase common stock of the Company at
a strike price of $0.25 per share.
Phase Two: US$15,000 (fifteen thousand US dollars) per month, payable to
XxxxxXxxx Capital Partners LLC in monthly installments. The first payment of
US$15,000 is due and payable upon completion of the contemplated $2,000,000
Phase One Financing, US$15,000 being payable the first day of each succeeding
month until the completion of the Phase Two Financing. This fee will be netted
against any fees payable pursuant to Paragraph 7 below.
4. Appointment as Agent and Finder for Capital Raising
The Company hereby further appoints and retains XxxxxXxxx, on a "best efforts"
basis, as its sole and exclusive financial agent and finder of debt and/or
equity capital sources. The Company may from time to time recommend that
XxxxxXxxx collaborate, or XxxxxXxxx may propose that it collaborate with other
qualified investment bankers, in which case XxxxxXxxx shall enter into an
appropriate syndication, fee sharing, or consulting agreements with such
parties. The Company understands, however, that neither XxxxxXxxx itself nor its
collaborators shall not have any obligation hereunder as a result of such
appointment to purchase or underwrite any securities of the Company or to
provide financing of any kind to the Company.
5. Confidentiality
It is understood that during the course of this engagement XxxxxXxxx will be
furnishing proprietary and confidential advice and information to you relating
to capital and other business sources developed by XxxxxXxxx through its
relationships with such sources and that, accordingly, any such information, or
any other information relating to XxxxxXxxx'x efforts on your behalf with third
parties provided to you by XxxxxXxxx is confidential. You agree to treat as
confidential any such information or related or similar information provided to
you by XxxxxXxxx and you will not, without our prior written consent, yourself
use such information or disclose such to any third party. We, in turn, will
treat as confidential and will not without your prior written consent, use or
disclose to any third party any confidential information provided to XxxxxXxxx
by you. Notwithstanding the foregoing, the terms of this Paragraph 1 shall not
apply to any information which is or becomes generally available to the public,
is required by law to be disclosed, or is obtained from any third party which is
in possession of such information through no fault of XxxxxXxxx and is not under
any obligation, to XxxxxXxxx'x knowledge, to treat such information as
confidential.
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6. Non-circumvention
During the term of this Engagement Letter, except for the purpose of acquiring
other companies in accordance with the Company's business plan, the Company, its
officers, directors, employees, agents, affiliates and/or successors shall not
directly or indirectly (i) offer any of its securities (or any instrument
similar to securities) for sale to or exchange with, or solicit any offer to
purchase or exchange any of its securities (or any instrument similar to a
security) from or otherwise contact, approach or negotiate with respect thereto,
any third party, or (ii) authorize anyone other than XxxxxXxxx to act on the
Company's behalf to place or exchange any of the Company's securities (or
instruments similar to securities) with any third party, without the prior
written consent of XxxxxXxxx. The Company shall promptly notify XxxxxXxxx of
such pending sales, as well as refer to XxxxxXxxx all offers, inquiries and
proposals relating to any placement or exchange of securities directly or
indirectly relating to the transaction made to the Company at any time during
the term of this Engagement Letter.
The Company further agrees that for a period of one year from the termination of
this Agreement, that its officers, directors, employees, agents, affiliates,
and/or successors will not make any contact with, deal with or otherwise be
involved in any future transaction(s) with, any banking or lending institutions,
trusts, corporations, companies or individuals, lenders or borrowers, buyers or
sellers, or to other business partners, including those specified herein, which
were introduced by XxxxxXxxx to you, without the written consent of XxxxxXxxx.
You further agree that no effort shall be made to circumvent the terms of this
Engagement Letter in an effort to amend or modify such terms, including, without
limitation, the fee structure set forth herein.
7. Compensation for Capital Raising Efforts
TN Capital Equities Ltd., a XxxxxXxxx Group company, NASD member firm and
registered broker/dealer, and the Company shall enter into an exclusive
Placement Agent Agreement substantially in accordance with industry standards.
The placement fee for the Phase One Financing shall be 10% payable in cash at
closing, plus 10% in cashless warrants to purchase common stock of the Company
at a strike price per share equal to the offering price, issued and registered
at closing.
XxxxxXxxx shall act as Placement Agent for the Phase Two Financing, on the same
terms as Phase One.
In addition to, but not in lieu of, any other compensation or other sums payable
to TN Capital Equities Ltd. pursuant to the above referenced Placement Agent
Agreement, the Company agrees to pay XxxxxXxxx a "Success Fee" for transactions
completed but not anticipated under the above referenced Placement Agent
Agreement, equal to five percent (5%) of the first five million dollars
(US$5,000,000), three percent (3%) of the amount over five million up to ten
million (US$5,000,000 - $10,000,000), and one percent (1%) of the balance above
ten million (US$10,000,000) of the gross amount of any capital whether debt or
equity raised for the Company or the value of any merger consideration whether
by the efforts of XxxxxXxxx, the Company or its management employees, or any
third party. XxxxxXxxx shall receive a success fee of 1% for introducing and
negotiating any future investment banking agreements. The Success Fee shall be
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paid at the closing of any such transaction and at the sole choice of XxxxxXxxx
in cash, kind or equity (in the form of options, warrants or other convertible
debt or equity securities of the surviving Company in any merger or such other
consideration which may form all or part of the consideration paid or exchanged
at any such closing or thereafter as part of the consideration paid or exchanged
at any such closing or thereafter as part of the transaction or a combination of
both). A minimum payment of one hundred thousand dollars ($100,000) shall,
however, be payable to XxxxxXxxx upon closing of any such financing. In the
event of any other business arrangement resulting in substantial part from the
efforts of XxxxxXxxx (such as a joint venture licensing arrangement etc.) the
Company shall pay XxxxxXxxx fees customary in the industry for such transactions
which fees to be agreed prior to the signature of the transaction.
Notwithstanding the foregoing, no additional fees under this paragraph shall be
payable with respect to any acquisition by the Company of any of the entities
listed on Annex 1 to this Agreement.
If within twelve (12) months following expiration or termination of this
Engagement Letter, for any reason except the gross and willful negligence or
misconduct of XxxxxXxxx, any transaction is closed with any party identified by
XxxxxXxxx prior to such expiration or termination, the Success Fee shall be
payable to XxxxxXxxx in accordance with this Paragraph 7.
8. Expenses and Break-Up Fee
The Company shall reimburse XxxxxXxxx for all pre-approved expenses paid or
incurred by XxxxxXxxx for travel, or goods and services which are necessary or
appropriate in order to fulfill our obligations under this Engagement.
The Company may, for any reason, refuse any transaction proposed by XxxxxXxxx.
If the Company for any reason determines not to proceed with any transaction
contemplated by this Engagement Letter after such transaction has been requested
and agreed to by the Company, for instance if the Company has executed a
Placement Agent Agreement or has engaged XxxxxXxxx to arrange for a specific M&A
or financing transaction in accordance with pp 7 the Company agrees to pay
XxxxxXxxx as liquidated damages a "break-up fee" of two hundred fifty thousand
US Dollars (US$250,000) unless otherwise agreed in advance. Such fee shall be
paid in lieu of any damages thereby resulting to XxxxxXxxx as a result of such
withdrawal by the Company.
9. Term of Agreement and Termination
The term of this Agreement: Phase One shall be completed thirty (30) days from
the date of the offering memorandum for the Bridge Financing. Phase Two shall be
completed ninety (90) days from the date of the offering memorandum, unless
extended by mutual agreement for an additional sixty (60) days.
This Agreement may be terminated by either party at any time upon thirty (30)
days prior written notice, provided, however, that the provisions hereof
relating to confidentiality (Par. 5), the payment of fees and expenses, (Pars.
3, 7, and 8), and right of first refusal (Par. 10), indemnification (Par. 11)
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and non-circumvention (Par. 6) will survive the expiration or earlier
termination of the term of this Engagement Letter, unless terminated by reason
of the gross and willful negligence or misconduct of XxxxxXxxx.
00. Right of First Refusal
The Company, provided that XxxxxXxxx is successful in completing the financings
herein contemplated, does hereby xxxxx XxxxxXxxx a right of first refusal to
raise any capital or advise with respect to any merger or similar transaction by
the Company, whether debt or equity, public or private (except commercial bank
lines of credit or short-term loans for use in the normal course of business),
commencing with the date of this Engagement Letter and continuing for twelve
(12) months from termination hereof. The Company shall notify XxxxxXxxx in
writing of any such proposed financings (including the proposed material terms
thereof) and XxxxxXxxx shall have fifteen (15) days from receipt of such notice
to agree to provide such financing on the same or substantially similar terms.
11. Indemnification
If, in connection with any services which are the subject of this Engagement
Letter or that otherwise related to or arise out of or in connection with our
engagement hereunder, we become involved in any capacity in any action or legal
proceeding, you agree to reimburse us for our reasonable out-of-pocket expenses,
including fees and disbursements of our counsel. You also agree to indemnify and
hold us harmless against any losses, claims, damages or liabilities to which we
may become subject in, relating to or arising out of any action or proceeding in
connection with the services which are the subject of this Engagement Letter or
otherwise relating to or arising out of or in connection with our engagement
hereunder, provided, however, that you shall not be liable with respect to any
loss, claim, damage or liability to the extent a court of competent jurisdiction
shall have determined to have resulted from our willful misfeasance or gross
negligence.
12. Miscellaneous
A. Independent Contractor Status.
It is understood and agreed that XxxxxXxxx is engaged by the Company as an
independent contractor, solely to provide the services described herein. Nothing
contained in this Engagement Letter nor the performance of services contemplated
hereby, or otherwise, shall create a fiduciary duty on the part of XxxxxXxxx to
the Company, nor shall XxxxxXxxx have any duties, obligations or liability to
the security holders of the Company or any third party in connection with its
engagement hereunder.
X. XxxxxXxxx'x Efforts.
XxxxxXxxx undertakes this engagement and will work with you to achieve your
desired objectives by using its best efforts, judgment and skill. XxxxxXxxx
makes no representation or guarantee regarding the outcome of our engagement.
XxxxxXxxx makes no representation or warranties that any financing is or will be
available nor that any entity which desires or commits to a transaction would in
fact honor its commitments. XxxxxXxxx will not be liable for the Company's
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inability or failure to conclude a transaction or obtain financing through
XxxxxXxxx'x efforts.
C. Governing Law and Appointment of Legal Counsel.
This Engagement Letter shall be governed by and construed in accordance with the
laws of the State of New York, without any references to its conflicts of laws
principles, and shall be binding upon the parties and the respective legal
representatives, successors, and assigns. No delay or failure by any party to
exercise any right under this Agreement, and no partial or single exercise of
any right, shall constitute a waiver of that or any other right, unless
otherwise expressly provided herein.
You agree that we may elect to select the counsel to prepare the documentation
to accomplish any transaction in which we may act under this Engagement Letter.
Such documentation may be subject to review by other counsel of your choice. You
acknowledge that the advance payment of a retainer, with your prior approval,
may be required in any such case. You shall reimburse us promptly for any
retainer and other payment of fees and disbursements incurred or billed to us
for such services. We shall, further, have the right to direct that any such
fees and disbursements then unpaid be paid as your expense from closing
proceeds, or direct that the counsel in question may proceed directly against
you for collection. Such counsel shall be a third party beneficiary of this
Engagement Letter.
D. Entire Understanding.
This Engagement Letter contains the entire understanding between the Company and
XxxxxXxxx with reference to the subject matter hereof and supersedes any prior
understandings and agreements related thereto, whether written or oral. This
Engagement Letter may be executed in one or more counterparts, which together
shall constitute a binding agreement. A signed facsimile will create and
constitute an original, legally binding agreement on the party sending the same.
E. Costs of Obtaining Benefits.
The Company shall reimburse XxxxxXxxx for the full cost of any legal fees and
expenses incurred by XxxxxXxxx in enforcing or obtaining the benefits to which
it is entitled under the terms of this Engagement Letter.
F. Severability.
If any provision of this Engagement Letter, or the application of such provision
to any person or circumstances, shall be held invalid, the remainder of this
Engagement Letter, or the application of such provision to persons or
circumstances other than those to which it is held invalid, shall not be
affected thereby.
G. Headings.
The text in the headings of paragraphs and subparagraphs of this Engagement
Letter are for convenience of identification only and do not constitute a part
of any such paragraph and/or subparagraph.
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H. Notices.
Any notice required to be given pursuant to this Agreement shall be in writing
and shall be hand delivered, mailed by certified mail with return receipt
requested, or sent by recognized overnight courier service, as follows.
If to Category 5 Technologies, Inc.: 0000 Xxxxx Xxxxxxx Xxxx., Xxxxx 000, Xxxx
Xxxx Xxxx, Xxxx 00000
If to XxxxxXxxx Capital Partners, Inc.: 00 Xxxx 00xx Xxxxxx, Xxxxx 000, XX, XX
00000
If the foregoing constitutes the agreement and understanding of the Company,
please confirm this by signing, dating and returning or faxing one copy of this
Engagement Letter to the undersigned.
XxxxxXxxx Capital Partners LLC
By /s/ Xxxx X. Xxxxxxxxx
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Name Title
Category 5 Technologies, Inc.
By /s/ Xxxxxxx X. Xxxxx
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Name: X. Xxxxx Title: CEO
Date:
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