Re: Investment Banking Agreement with Legend Securities, Inc. Dear Ms. Hearn,
EXHIBIT 10.1
Xxxxxxxx
Xxxxx
President
& CEO
Element
21 Sports Co.
000
Xxxxx’x Xxxx Xxxx
Unit
1
Toronto,
ON M5A 4K9
Phone:
000-000-0000 xxx 000
Re: Investment Banking Agreement with
Legend Securities, Inc.
Dear
Xx. Xxxxx,
This
letter (the "Agreement")
shall confirm the engagement of Legend Securities, Inc., ("Legend")
by Element 21 Sports Co. (the "Company"
and collectively the "Parties") for
purposes of providing, on a non-exclusive basis, investor awareness and business
advisory services as set forth below in consideration for the fees and
compensation described hereinafter:
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1.
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The
Agreement shall be effective as of the date it is executed by the Parties
(the "Effective
Date").
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2.
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The
Company agrees to provide Legend such information, historical financial
data, projections, proformas, business plans, due diligence documentation,
and other information (collectively the "Information")
in the possession of the Company that Legend may reasonably request or
require to perform the Services (as hereinafter defined) set forth herein.
The Information provided by the Company to Legend shall be true, complete
and accurate in all material respects as of the date specified therein and
shall not set forth any untrue statements nor omit any fact required or
necessary to make the Information provided not misleading. The Company
acknowledges that Legend may rely during the Term on the accuracy and
completeness of all Information provided by the Company without
independent verification. The Company authorizes Legend to use such
Information solely in connection with its performance of the
Services.
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3.
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Legend will use its
best efforts to furnish ongoing investor awareness and business
advisory services (the "Services") as the
Company may from time to time reasonably request the Services may include,
without limitation, the following:
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· assistance
with investor presentations such as, but not limited to, PowerPoint slidepresentations, broker/dealer fact
sheets, financial projections and budgets;
· sponsorship
to capital conferences;
· identification
and evaluation of financing transactions;
· identification
and evaluation of acquisition and/or merger candidates;
· introductions
to broker dealers, research analysts, and investment companies that Xxxxxx
believes could be helpful to the Company.
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4.
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The
term of this Agreement shall be twelve (12) months from
the Effective Date of this Agreement; provided that the Company may, in
its discretion, extend the Term for up to an additional six (6) months by
providing notice of such extension to Legend at any time prior to the
expiration of this Agreement (such period, as it may be extended pursuant
to this sentence, the "Term"), and the
additional compensation owed to Legend during any such extension shall be
the Monthly Advisory Fee described hi Section 5. The Agreement may not be
terminated by the Parties during the first ninety days following the
Effective Date (the "Introduction
Period") other than as a result of a material breach of any
provision of this agreement that is not uncured within ten (10) days following
notification thereof by the non- breaching party. Following the
Introduction Period and in the event that the Company desires to terminate
this Agreement at any time prior to the expiration date, it shall provide
Legend with written notice of its intention to terminate this Agreement
and this Agreement shall so terminate immediately following delivery of
such notice by the Company (the "Termination
Date"), without any further responsibility for either party;
provided, however, that Legend shall be entitled to receive all accrued
compensation, including all vested - fees (as set forth below) and
un-reimbursed expenses, if any, outstanding as of the Termination Date and
Legend's obligations under Section 2 regarding Information of the Company
shall survive such termination. Notice shall be deemed delivered when sent
via e-mail, facsimile, or when deposited with a bonded overnight
courier.
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5.
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In
consideration for the services described herein, the Company shall pay to
Legend a monthly advisory fee of ten thousand dollars ($10,000.00) per
month (the "Monthly
Advisory Fee").
The first month advisory fee shall be paid to Legend on the
Effective Date and thereafter no later than the first (1st) day of each
monthly anniversary of the Effective Date during the Term of this
Agreement. The Monthly Advisory Fee shall be earned and payable each month
and may not be deferred by the Company unless the Company submits a
written request to the Legend and Legend approves such request in writing.
Any fees that are deferred shall accumulate interest at a compound
interest rate of 12.0% per annum on the aggregate balance of deferred
Monthly Advisory Fees. The Monthly Advisory Fee shall be mailed to Legend
at the following address:
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Legend Securities, Inc
Attention: Xxxxxxxxx X.
Xxxxxx
00 Xxxxxxxx Xxxxx 000
New York, NY 10006
Phone: 000-000-0000 xxx
000
Fax: 000-000-0000
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6.
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Simultaneously
with the execution of this Agreement, the Company shall issue and deliver
to Legend a common stock purchase warrant (the "Warrant")
for the purchase of Three Hundred and Fifty Thousand (350,000) shares of
the Company's common stock. The Warrant shall have an exercise price equal
to the average closing bid price of the Company's common stock on the last
ten (10) consecutive trading days ending three days before the Effective
Date. Notwithstanding the foregoing, the Warrant shall vest completely and
in favor of the Legend as follows:
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| Date |
Number of
Shares
underlying the
warrant
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| The Effective Date | 87,500 | |
| Each 90 Day anniversary of the Effective Date | 87,500 |
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7.
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The
Warrant, upon issuance, shall be fully paid, non-assessable, and free of
any restrictions on transfer, but for those restrictions that are the
result of state or federal securities laws. The Warrant shall be issued to
Legend in the form of a warrant agreement (the "Warrant
Agreement"), which shall be in a form and content reasonably
satisfactory to Legend and its counsel and the Company and its counsel.
The Warrant Agreement shall provide for, among other provisions, the above
terms and the following: (1) The Warrant shall expire five years after the
date that the Warrant Agreement is issued; (2) The Warrant shall have
customary anti-dilution provisions for stock dividends, splits, mergers,
and sale of substantially all assets of the Company; (3) Legend may
exercise the Warrant at any time after signing the Warrant Agreement to
the extent vested as described in Section 6; (4) The Warrants shall
contain a "Cashless Exercise" provision that may be utilized 180 after
issuance if there is not an effective Registration Statement covering the
underlying common shares; (5) The Company shall reserve, and at all times
have available, a sufficient number of shares of its common stock to be
issued upon the exercise of the Warrant; and (6) The Company shall grant
unlimited "piggy back" registration rights, at the Company's expense, to
include the shares of the underlying common stock in any registration
statement filed by the Company under the Securities Act of 1933 relating
to an underwriting of the sale of shares of common stock or other security
of the Company.
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The Warrant shall be issued in the name of (Names will be provided under
separate cover) and mailed to the following address:
Legend Securities, Inc
Attention: Xxxxxxxxx X.
Xxxxxx
00 Xxxxxxxx, Xxxxx 000
New York, NY 10006
Phone: 000-000-0000 xxx
000
Fax: 000-000-0000
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8.
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The
Company will promptly notify Legend in writing upon the filing of any
registration statement or other periodic reporting documents filed
pursuant to the rules and regulations of the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as
amended.
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9.
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The
Company recognizes that Legend now renders and may continue to render
financial consulting, management, investment banking and other services to
other companies that may or may not conduct business and activities
similar to those of the Company. Legend shall be free to render such
advice
and other services and the Company hereby consents thereto. Legend shall
not be required to devote its full time and attention to the performance
of its duties under this Agreement, but shall devote only so much of its
time and attention as it deems reasonable or necessary to fulfill its
obligation hereunder.
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10.
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During
the Term of this Agreement the Company covenants, promises and agrees
that:
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(a) Company
shall immediately notify Legend if it is the subject of any materialinvestigation or material
litigation.
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11.
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This
Agreement shall be governed by and construed under the laws of the State
of New York without regard to principals of conflicts of laws provisions.
In the event of any dispute between the Company andLegend
arising under or pursuant to the terms of this Agreement, or any matters
arising under the terms of this Agreement, the same shall be settled only
by arbitration through FINRA Dispute Resolution in County of New York, New
York City, State of New York,
in accordance with the Code of Arbitration Procedure published by FINRA
Dispute Resolution. The determination of the arbitrators shall be final
and binding upon the Company and Legend and
may be enforced in any court of appropriate jurisdiction. This Agreement
shall be construed by and governed exclusively under the laws of the State
of New York, without regard to its conflicts of law provisions. The venue
shall be in County of New York, NY.
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12.
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The
Company shall reimburse Legend for all approved out of pocket expenses,
including without limitation acceptable travel and lodging, printing,
legal, and mailing cost thatLegend may
incur in performance of the Services under this Agreement, provided Legend
receives the Company's prior approval for any and all out of pocket
expenses above five hundred
dollars.
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13.
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The
Company may disclose to Legend certain Information that is Proprietary
Information (as defined below) relating to certain privileged and
confidential business matters that it would like Legend to
evaluate. These disclosures will be given in strict secrecy and confidence
and the Parties agree to use their best efforts to protect the integrity
and confidentiality of the Proprietary Information. As used herein,
Proprietary Information means any and all non-public data, ideas and
information, in whatever form, tangible or intangible, which is provided
to Legend by the
Company in connection with the Agreement. If oral, in order to be
considered "Proprietary Information" it must be followed by a written memo
detailing the confidential nature of same and stamped "Proprietary
Information."
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14.
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[A] The Company
shall indemnify and hold harmless Legend and its directors, officers,
employees, agents, attorneys and assigns from and against any and all
losses, claims, costs, damages or liabilities (including the reasonable
fees and expenses of legal counsel) to which any of them may become
subject in connection with the investigation, defense or settlement of any
actions or claims: (i) caused by any untrue statement or alleged untrue
statement of any material fact contained in any Information provided by
the Company or the omission or alleged omission to state a material fact
required to be stated in any such Information or necessary to make the
statements in any Information not misleading, provided such Information
was used by Legend in
rendering any Service hereunder; (ii) arising in any manner out of or in
connection with the rendering of Services by Legend
hereunder; or (iii) otherwise in connection with this Agreement; provided,
however, that the Company will not be liable in any such case if and to
the extent that any such loss, claim, cost, damage or liability arises out
of any breach of this Agreement by Legend, or
any misrepresentation or alleged misrepresentation of the material facts
provided to Legend by the
Company or arising from acts of gross negligence or malfeasance by Legend or any
breach by Legend of
this Agreement.
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[B]
Legend shall indemnify and hold harmless the Company and its
directors, officers, employees, agents, attorneys and assigns from and
against any and all losses, claims, costs, damages or liabilities
(including the reasonable fees and expenses of legal counsel) to which any
of them may become subject in connection with the investigation, defense
or settlement of any actions or claims: (i) caused by any untrue statement
or alleged untrue statement of any material fact contained in any
information provided by Legend other than Information provided to Legend
by the Company ("Legend Information") or the omission or alleged omission
to state a material fact required to be stated in any such Legend
Information or necessary to make the statements in any Legend Information
not misleading; (ii) arising in any manner out of or in connection with
the rendering of Services by Legend hereunder; or (iii) otherwise in
connection with this Agreement; provided, however, that Legend will not be
liable in any such case if and to the extent that any such loss, claim,
cost, damage or liability arises out of any breach of this Agreement by
the Company or arising from acts of gross negligence or malfeasance by the
Company or any breach by the Company of this
Agreement
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[C] Promptly
after receipt of notice of the commencement of any action, the party
against whom an action is brought (the "Indemnified Party") shall, if a
claim is also being made against the other party (the "Indemnifying
Party") for indemnification pursuant to this Agreement, notify the
Indemnifying Party in writing of such action; provided that, the
Indemnifying Party shall be relieved from any obligation to indemnify the
Indemnified Party pursuant to this Agreement to the extent that any delay
by the Indemnified Party to provide notice to the Indemnifying Party
pursuant to this Section impairs or prejudices the Indemnifying Party's
ability to assume and defend any such action. In case any such action
shall be brought against the Indemnified Party it shall notify the
Indemnifying Party of the commencement of such action, and the
Indemnifying Party shall be entitled to participate in and, to the extent
it shall wish, to assume and undertake the defense thereof with counsel
reasonably satisfactory to the Indemnified Party, and, after notice from
the Indemnifying Party to the Indemnified Party of its election so to
assume and undertake the defense of such action, the Indemnifying Party
shall not be liable to the Indemnified Party under this paragraph 13 for
any legal expenses subsequently incurred by the Indemnified Party in
connection with the defense of such action; if the Indemnified Party
retains its own counsel, then Indemnified Party shall pay all fees, costs
and expenses of such counsel, provided, however, that, if the defendants
in any such action include both the Indemnified Party and the Indemnifying
Party and the Indemnified Party shall have reasonably concluded that there
may be reasonable defenses available to it which are different from or
additional to those available to the Indemnifying Party or if the
interests of the Indemnified Party reasonably may be deemed to conflict
with the interests of the Indemnifying Party, the Indemnifying Party and
the Indemnified Party shall have the right to select one separate counsel
and to assume such legal defenses and otherwise to participate in the
defense of such action, with the reasonable expenses and fees of such
separate counsel and other expenses related to such participation to be
reimbursed by the Indemnifying Party as
incurred.
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16.
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The
Company acknowledges that Legend has made no guarantees that its
performance hereunder will achieve any particular result with respect to
the Company's business, stock price, trading volume, market capitalization
or otherwise.
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17.
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All
notices hereunder shall be in writing and shall be validly given, made or
served if in writing and delivered in person or when received by facsimile
transmission, or five days after being sent first class certified or
registered mail, postage prepaid, or one day after being sent by
nationally recognized overnight carrier to the party for whom intended at
the address set forth after each Parties
signatures.
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18.
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If
any clause or provision of this Agreement is illegal, invalid or
unenforceable under applicable present or future Laws effective during the
Term, the remainder of this Agreement shall not be affected. In lieu of
each clause or provision of this Agreement that is illegal, invalid or
unenforceable, there shall be added as a part of this Agreement a clause
or provision as nearly identical as may be possible and as may be legal,
valid and enforceable. In the event any clause or provision of this
Agreement is illegal, invalid or unenforceable as aforesaid and the effect
of such illegality, invalidity or unenforceability is that either party no
longer has the substantial benefit of its bargain under this Agreement and
a clause or provision as nearly identical as may be possible cannot be
added, then, in such event, such party may in its discretion cancel and
terminate this entire Agreement provided such party exercises such right
within a reasonable time after such
occurrence.
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19.
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The
Parties agree and acknowledge that they have jointly participated in the
negotiation and drafting of this Agreement and that this Agreement has
been fully reviewed and negotiated by the Parties and their respective
counsel. In the event of an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted
jointly by the Parties and no presumptions or burdens of proof shall arise
favoring any party by virtue of the authorship of any of the provisions of
this Agreement.
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20.
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This
Agreement may not be modified, amended, supplemented, canceled or
discharged, except by written instrument executed by all Parties. No
failure to exercise, and no delay in exercising, any right, power or
privilege under this Agreement shall operate as a waiver, nor shall any
single or partial exercise of any right, power or privilege hereunder
preclude the exercise of any other right, power or privilege. No waiver of
any breach of any provision shall be deemed to be a waiver of any
preceding or succeeding breach of the same or any other provision, nor
shall any waiver be implied from any course of dealing between the
Parties. To be effective, all waivers must be in writing, signed by both
Parties. The rights and remedies of the Parties under this Agreement are
in addition to all other rights and remedies, at law or equity, that they
may have against each other except as may be specifically limited
herein.
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21.
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This
Agreement contains the entire understanding of the Parties in respect of
its subject matter and supersedes all prior agreements and understandings
(oral or written) between or among the Parties with respect to such
subject matter. The Parties agree that prior drafts of this Agreement
shall not be deemed to provide any evidence as to the meaning of any
provision hereof or the intent of the Parties with respect thereto. Any
amendment or modification to the Agreement shall be by written instrument
only and must be executed by a representative, with complete authority,
from the Company and Legend.
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22.
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This
Agreement may be executed in any number of counterparts, each of which
shall bean original but all of which together shall constitute one and the
same instrument. A telecopy signature of any party shall be considered to
have the same binding legal effect as an original
signature.
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23.
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In
the event that any dispute among the Parties to this Agreement should
result in litigation, the substantially prevailing party in such dispute
shall be entitled to recover from the losing party all fees, costs and
expenses of enforcing any right of such substantially prevailing party
under or with respect to this Agreement, including without limitation,
such reasonable fees and expenses of attorneys and accountants, which
shall include, without limitation, all fees, costs and expenses of appeals
and collection.
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[REMAINDER
OF XXXX LEFT INTENTIONALLY BLANK]
5
If the
foregoing is in accordance with your understanding, kindly confirm your
acceptance and agreement by signing and returning the enclosed duplicate of this
Agreement that will thereupon constitute an agreement between us.
| Very truly yours, |
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/s/
Xxxxxxxxx X. Xxxxxx
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| Xxxxxxxxx X. Xxxxxx | ||||
| President & CFO | ||||
Accepted and approved this 10th day of December , 2009
| Element 21 Sports Co. | ||||
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By:
/s/ Xxxxxxxx Xxxxx
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Xxxxxxxx
Xxxxx
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| President & CEO |
