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Exhibit 10.17
ENGAGEMENT AGREEMENT
This Engagement Agreement ("Agreement") sets the basis upon which Linkon
Corporation, ("LINKON" or "the Company") has engaged Xxxxxx, Xxxx & Company,
Inc. ("MECo") to act as exclusive advisor to LINKON or any of its affiliated
companies, in connection with a strategic alliance, financing, distribution
agreement, or merger and/or sale of the Company (collectively referred to herein
as a "Strategic Alliance"). This Agreement exclusivity covers all companies of
Japanese origin, or any subsidiaries/affiliates of such Japanese companies.
I. OBJECTIVES
MECo understands LINKON's Interests with regards to a Strategic Alliance to
incorporate any or all of the following:
(1) Support of a private placement, terms for which would have to be
structured,
(2) A target strategic investor, merger partner, or purchaser for LINKON,
(3) Support for implementation of a product distribution (or licensing)
relationship,
(4) Support for joint research and development of next generation LINKON
products.
MECo will use its best efforts to:
(A) Identify prospective Merger Partner/Purchasers/Investors/Distributors
(collectively, "Partners"). Evaluate, prioritize and recommend to and
secure approval from LINKON to initiate discussions. MECo will maintain
and provide to LINKON on a regular basis, an ongoing list of all
prospects including name, contact and status.
(B) Confirm LINKON's interest in and arrange for management of LINKON to
meet the potential Partners as an initial step in negotiating a
transaction.
(C) Analyze LINKON to determine a fair value in order to negotiate
appropriate terms of the sale/strategic alliance in conjunction with
LINKON. MECo will assist in all phases of negotiations, as well as
interface as appropriate with LINKON's counsel, auditors, and public
relations consultants in analysis, strategy, negotiations and any other
steps necessary to the consummation of the transaction. MECo will
assist in the preparation of relevant documents as is warranted.
II. FEES
As consideration for MECo's services, LINKON will pay a Retainer Fee, Contingent
Transaction Fees, and reimbursement of expenses as set forth below:
(A) Retainer Fees:
(1) LINKON shall pay to MECo, for each three month period (each a
"Retainer Period") following the Effective Date (as defined in
Section IV below), a retainer fee (the "Retainer Fee") of: (i)
15,000 "144 class" shares (the "Shares") of common stock of LINKON
and (ii) warrants (the "Warrants") to purchase 30,000 shares of
the registered common stock of LINKON. The Shares paid to MECo as
part of the Retainer Fee for each Retainer Period under this
Agreement shall have piggy-back registration rights. The Warrants
paid to MECo as part of the Retainer Fee for each Retainer Period
shall have an exercise price equal to the price of the common
stock of LINKON on the first day of the applicable Retainer
Period. The Warrants shall contain standard anti-dilution features
adjusting for stock-splits and shall have an expiration date which
is five years from the Effective Date. Each Retainer Fee shall be
paid on the first day of the applicable Retainer Period. LINKON
may cancel the Agreement at any time by giving MECo thirty days
prior written notice. In the event that the Agreement is
terminated prior to the end of any quarter, MECo will retain the
full Retainer Fee for the applicable Retainer Period.
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(2) LINKON acknowledges that MECo has been providing services for
LINKON (such as preliminary research and potential partner
contact) since December 1, 1998. In consideration for such
services rendered and in addition to any Retainer Fees payable to
MECo pursuant to paragraph (A)(1) above, LINKON shall pay to MECo,
on the Effective Date, additional warrants (the "Additional
Warrants") to purchase 30,000 shares of the registered common
stock of LINKON. The Additional Warrants shall have an exercise
price of $0.5312 per share of common stock of LINKON, shall
contain standard anti-dilution features (including adjustments
upon stock-splits) and shall have an expiration date which is five
years from the Effective Date.
(B) Contingent Transaction "Success" Fee: The contingent transaction fee
will be as follows:
(1) Upon the successful closing of an equity transaction, (a sale of
LINKON stock, in whole or in part), MECo shall earn a success fee
equivalent to 7.0% of the value of the consideration received for
LINKON equity. Equity shall be defined as any security with an
equity component, such as convertibles, preferred stock, etc.
(2) In the event of a merger between LINKON and another company
directly or indirectly introduced by MECo, MECo shall earn a fee
of 7.0% of the valuation of LINKON, as reported in the merger
documentation.
(3) If LINKON receives debt financing from a Partner directly or
indirectly introduced by MECo, MECo shall earn a fee of 2.0% of
such financing. For purposes of this Agreement debt financing
shall be defined as any form of debt, whether short term or long
term. Preferred stock and convertible are defined as equity,
subject to a fee as outlined in (1) or (2) above.
(4) Upon the implementation of a distribution and/or licensing
agreement, MECo shall earn a fee of three (3.0) percent of all
LINKON sales or royalties received through such agreement. Such
fees will be paid quarterly for a period of five years. MECHANICS
GOVERNING THIS CLAUSE WILL BE WILL BE AGREED UPON BETWEEN THE
PARTIES AND PROVIDED AS A RIDER HERETO AT A LATER DATE.
(C) Expense Reimbursement: During the term of this Agreement, LINKON will
reimburse MECo for its reasonable out-of-pocket expenses for travel,
lodging, food and communications, including long distance charges,
express delivery charges, etc. MECo agrees that total reimbursable
expenses under this paragraph, excluding travel expenses that have been
approved in advance by LINKON, shall not exceed $3,000 per quarter.
LINKON agrees to reimburse MECo within 30 days following submission of
a request for expense reimbursement.
Any contingent fee due to MECo shall be payable by LINKON upon the receipt of
proceeds from the Transaction at closing. For the purpose of this Agreement, the
term "Transaction" shall mean the total consideration paid by the
Purchasers/Investors or received by LINKON for the conveyance of a current or
future ownership interest in LINKON.
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Any obligation of LINKON to pay a contingent fee (as described in Section II.
(B) above) pursuant to the Agreement shall remain in effect for a period of 24
months from the date of termination of this Agreement, for all prospects
introduced by MECo to LINKON. In the event of multiple closings and/or multiple
transactions, MECo shall be entitled to a fee based upon each transaction
occurring within this period.
LINKON will indemnify MECo from and against any liability arising from the
authorized efforts by MECo under this Agreement, and of information furnished by
LINKON that is false or misleading.
MECo will indemnify LINKON from and against any liability for finders fees,
brokerage fees, or any other compensation claimed by any other person allegedly
used or engaged by MECo in connection with the transaction.
III. MISCELLANEOUS
(A) Notices. Any notice, demand, or communication required or
permitted to be given by any provision of this Agreement shall be
deemed to have been sufficiently given or served for all purposes
if delivered personally to the party or to an executive officer of
the party to whom the same is directed or, if sent by registered
or certified mail, postage and charges prepaid, addressed to the
party's address, as appropriate, or if sent by facsimile provided
transmission thereof is confirmed. If sent by registered or
certified mail, any such notice shall be deemed to have been given
five business days after the date on which the same was deposited
in a regularly maintained receptacle for the deposit of United
States mail, addressed and sent as aforesaid.
(B) Headings. The headings in this Agreement are inserted for
convenience only and are in no way intended to describe,
interpret, define, or limit the scope, extent or intent of the
Agreement or any provision hereof.
(C) Heir, Successors and Assigns. Each and all of the covenants,
terms, provisions and agreements herein contained shall be binding
upon and inure to the benefit of the parties hereto and their
respective heirs, legal representatives, successors and assigns.
(D) Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original but both of which shall
constitute one and the same instrument.
(E) Entire Agreement. This Agreement contains the entire agreement of
the parties and supersedes any prior agreements, whether written
or verbal, and may only be amended by an agreement in writing
signed by both of the parties.
(F) Governing Law. This Agreement shall be governed by the laws of the
State of New York without regard to principles of conflicts of law
or choice of law.
IV. EFFECTIVE DATE
The Effective Date of this Agreement shall be February 12, 1999.
In Witness Whereof, the parties have executed this Agreement.
AGREED TO AND ACCEPTED:
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LINKON CORPORATION XXXXXX, XXXX & COMPANY, INC.
By: /s/ Xxx X. Xxxx By: /s/ Xxxx X. Xxxxxx
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Xxx X. Xxxx Xxxx X. Xxxxxx
President and CEO President
Date: Feb. 12, 1999 Date: 3/5/99
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XXXXXX, XXXX & COMPANY, INC.
Investment Banking
00 Xxxx Xxxxxx,
Xxx Xxxx, X.X. 00000
Tel. 000-000-0000
Fax. 000 000 0000
Web. xxxx://xxx.xxxxxxxxxxx.xxx
SIDE LETTER NO. I TO THE ENGAGEMENT AGREEMENT
March 11, 1999
Xx. Xxx X. Xxxx
Linkon Corporation
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Dear Xxx:
As per the conversation earlier today with Xxx Xxxxxxxx in which he
confirmed that LinkNetwork Corporation is a subsidiary of Linkon Corporation and
that MECo's services would include services for LinkNetwork Corporation, for the
purpose of clarity, the Engagement Agreement dated February 12, 1999 (the
"Agreement"), between Linkon Corporation and MECo, shall be amended as follows:
(1) The first sentence of the Agreement shall read:
"This Engagement Agreement ("Agreement") sets the basis upon which Linkon
Corporation and any of its affiliated companies (including LinkNetwork
Corporation), ("LINKON" or "the Company") has engaged Xxxxxx, Xxxx &
Company, Inc. ("MECo") to act as exclusive advisor to LINKON, in connection
with a strategic alliance, financing, distribution agreement, or merger
and/or sale of the Company (collectively referred to herein as a "Strategic
Alliance")."
(2) Any payment of securities (including shares of common stock and warrants)
due to MECo under the Agreement shall be paid to MECo by Linkon Corporation
in the applicable securities of Linkon Corporation.
Any capitalized terms used but not defined in this letter shall have the
meanings provided in the Agreement. Except as expressly provided herein, the
terms of the Agreement shall remain in full force and effect without
modification or amendment. If the foregoing correctly sets forth the
understanding between us, please so indicate in the space below, whereupon this
shall constitute a binding agreement between us.
Agreed to by:
LINKON CORPORATION MORGEN, EVEN & COMPANY, INC.
By: /s/ Xxx X. Xxxx By: /s/ Xxxx Xxxxxx
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Name: Xxx X. Xxxx Name: Xxxx Xxxxxx
Title: President and Chief Title: President
Executive Officer
LINKNETWORK CORPORATION
By: /s/ Xxx X. Xxxx
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Name: Xxx X. Xxxx
Title: President and Chief
Executive Officer
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EXHIBIT G
ESCROW AGREEMENT
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