HELLER CAPITAL PARTNERS Englewood Cliffs, NJ 07632
Exhibit
10.24
XXXXXX
CAPITAL PARTNERS
000
Xxxx Xxxxxxxx Xxxxxx
Englewood
Cliffs, NJ 07632
000-000-0000
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May
15, 2006
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Xx.
Xxxxxxx Xxxxxxxx
Chairman
and Chief Executive Officer
Interactive
Systems Worldwide Inc.
0
Xxxxxxx
Xxxxx, 0xx Floor
West
Paterson, New Jersey 07424
Dear
Xx.
Xxxxxxxx:
This
letter will confirm our understanding concerning providing assistance to
Interactive Systems Worldwide Inc., a Delaware corporation (the “Company”). We
have agreed as follows:
1. The
Company hereby retains Xxxxxx Capital Partners (“Xxxxxx”) on a non-exclusive
basis to provide consulting services to the Company.
2. Xxxxxx’x
consulting services shall include matters relating to scheduling strategic
partner and customer meeting introductions and market and investment guidance.
In the performance of Xxxxxx’x consulting services, Xxxxxx shall comply with the
Company’s management integrity policies and practices as made known to
you.
3. A
person
shall not be deemed a source introduced by Xxxxxx hereunder (or a person with
respect to which Xxxxxx shall be entitled to a Fee, as hereafter defined),
unless and until (a) a written disclosure of the identity of such person shall
have been provided by Xxxxxx and received by the Company during the Term of
this
Agreement and prior to the Company having learned of the identity of such person
from any other source and prior to the Company having known or had discussions
with such person and (b) after such introduction by Xxxxxx, the Company and
such
person meet and discuss a possible Transaction; provided, however, that if
the
Company knew of a person prior to disclosure by Xxxxxx but the Company had
not
had any discussions with such person relating to a Transaction, and provided
that the Company is not obligated to pay a finder’s or similar fee to any other
person with respect to a potential Transaction with such person, Xxxxxx shall
nonetheless be entitled to a Fee, subject to the terms herein provided. If
a
source is introduced to the Company by Xxxxxx during the Term, which source
meets the criteria set forth in the first sentence of this Section 3, Xxxxxx
shall be entitled to a Fee with respect to a Commercial Transaction or an
M&A Transaction with such source, if, and only if, any such Transaction(s)
closes during the Term or within the 180-Day Tail.
4. In
the
event that the Company consummates a Transaction by means of (a) a contractual
arrangement resulting in the generation and receipt of revenue or proceeds
by
the Company from a source first introduced by Xxxxxx as described in Section
3,
(b) the sale by the Company of any of its capital stock, warrants, or options
to
acquire its capital stock, or the sale of any other security convertible into
its common stock, or notes to a source first introduced by Xxxxxx as provided
in
Section 3, or (c) a merger or sale of all or substantially all of the Company’s
assets, with a person, firm, or entity or an affiliate thereof, first introduced
to the Company by Xxxxxx as provided in Section 3, during the Term or within
the
180-Day Tail, then the Company shall pay to Xxxxxx the “Fee” (as hereinafter
defined). A transaction of the type referred to in subsections (a) or (b) above
is referred to as a “Commercial Transaction”; and a transaction of the type
referred to in subsection (c) above is referred to as an “M&A Transaction.”
Commercial Transaction (s) and M&A Transaction(s) are collectively referred
to herein as “Transactions.” The Company retains the right to determine all of
the terms and conditions of any Transaction and to accept or reject any
proposals submitted to it in its sole and absolute discretion.
5. The
term
of this Agreement (“Term”) shall commence on the date hereof and continue until
May 31,
2007,
unless extended by mutual agreement of the parties. Notwithstanding anything
to
the contrary contained herein, all payment obligations, if any, that arise
during the Term or during the 180-Day Tail shall survive the end of the Term
or
the 180-Day Tail, subject, however, to the provisions of Section
7(b).
6. Within
30
days after the date hereof, as part of the consideration for Xxxxxx entering
into this Agreement, the Company shall issue to Xxxxxx a warrant to purchase
150,000 shares of the Company’s Common Stock at an exercise price equal to the
volume weighted average price of the Company’s Common Stock as traded on NASDAQ
during the five trading days prior to the date hereof.
7. (a) In
the
event that any person, firm, entity of affiliate thereof, first introduced
to
the Company by Xxxxxx as provided in Section 3, enters into a Commercial
Transaction with the Company during the Term or within 180 days after the end
of
the Term (the “180-Day Tail”) as provided in Section 8, the Fee to which the
Xxxxxx shall be entitled shall be calculated as follows:
(i) Five
percent (5%) of the first one million ($1,000,000) dollars (or part thereof)
of
Net Proceeds (as hereinafter defined) received by the Company (and not
subsequently returned);
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(ii) Four
percent (4%) of the second one million ($1,000,000) dollars (or part thereof)
of
Net Proceeds received by the Company (and not subsequently
returned);
(iii) Three
percent (3%) of the next two million ($2,000,000) dollars (or part thereof)
of
Net Proceeds received by the Company (and not subsequently returned);
and
(iv) Two
percent (2%) of the Net Proceeds in excess of $4,000,000 received by the Company
(and not subsequently returned).
(b) Notwithstanding
the foregoing, Xxxxxx’x entitlement to the Fee, if any, set forth in this
Section 7(a) shall expire on December 31, 2008.
(c) As
used
herein the term “Net Proceeds” shall mean the gross revenue of the Company in
any applicable Commercial Transaction less: (i) all amounts paid to bettors
as
winnings or returns of xxxxxx; (ii) all gaming and similar taxes or levies
paid
by the Company in respect of revenue from wagering; (iii) and all amounts paid
to customers, partners, joint venturers or similar persons on a revenue sharing
basis. For example, if a source first introduced to the Company by Xxxxxx,
enters into a revenue sharing arrangement with the Company in which the Company
generates $1,000,000 but the Company returns 90% thereof to bettors ($900,000),
and pays 10% of the balance in gaming taxes ($10,000), and pays 30% of the
balance to the party with which the Company entered into this arrangement (30%
of $90, 000 = $27,000), Xxxxxx would receive its Fee based upon the $63,000
remaining. In any instance where any portion of the Net Proceeds is required
to
be, and is, returned to the source thereof by the Company, Xxxxxx shall promptly
return to the Company, a proportionate amount of the Fee paid to it attributable
to the portion of the Net Proceeds which is in effect reduced by reason of
such
subsequent return.
(d) In
the
event that any person, firm, entity or affiliate thereof first introduced to
the
Company by Xxxxxx as provided in Section 3 enters into an M&A Transaction
with the Company during the Term or within the 180-Day Tail, the Fee to which
the Xxxxxx shall be entitled shall be 2.5% of the Gross Proceeds of the M&A
Transaction paid to the Company or its equity security holders, which payment
shall be in cash or in the same form as such Gross Proceeds are paid to the
Company or its equity security holders, at the option of the
Company.
(e) Any
Fee
in respect of a Commercial Transaction due to Xxxxxx shall be payable to Xxxxxx
if, and only if, the Commercial Transaction closes and Net Proceeds are
subsequently received by the Company or its equity security holders. Net
Proceeds shall mean the sum of the cash consideration paid or provided to the
Company or its equity security holders plus the “Market Price”, as defined in
Section 7(g) of any securities delivered to the Company or its equity security
holders as part of the consideration for the Commercial
Transaction.
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(f) Any
Fee
in respect of an M&A Transaction due to Xxxxxx shall be payable to Xxxxxx
if, and only if, the M&A Transaction closes during the Term or prior to the
end of the 180-Day Tail. “Gross Proceeds” in respect of an M&A Transaction
shall mean the sum of the cash consideration paid or provided to the Company
or
its equity security holders plus the Market Price of any securities delivered
to
the Company or its equity security holders as part of the consideration for
the
M&A Transaction.
(g) The
“Market Price” of securities delivered to the Company or any of its equity
security holders shall be determined as set forth in the applicable Commercial
Transaction or M&A Transaction but if none is specified then by the last
sales price of such securities on the date received by the Company or its equity
security holders (or, if there were no transactions on such date, the mean
between the closing bid and asked prices on such date); provided that in the
event securities of a nonpublic company are issued, the value of such securities
shall be agreed upon in good faith by the parties hereto in order to determine
the Net Proceeds or Gross Proceeds, as applicable.
(h) The
Company shall not be obligated to pay expenses of Xxxxxx for such things as
travel, express mail, long distance phone calls and similar
expenses.
(i) If
the
Net Proceeds or Gross Proceeds are provided to the Company or its equity
security holders over time, the Fee shall be paid to Xxxxxx over time and shall
be paid to Xxxxxx as the consideration is paid to the Company, in proportion
to
the Net Proceeds or Gross Proceeds, as applicable, paid to the Company or its
equity security holders.
8. Subject
to the terms of Section 5, the Fee shall be paid to Xxxxxx within 5 business
days after the closing of the Commercial Transaction or M&A Transaction. The
Fee shall be earned and payable if the Commercial Transaction or M&A
Transaction is consummated during the Term, or within 180 days thereafter to
a
person, firm or entity or affiliate thereof first introduced to the Company
by
Xxxxxx (as provided in Section 3) during the Term. Within ten (10) days after
the end of the Term, Xxxxxx shall provide the Company with a list of the names
of the persons, firms and entities to whom Xxxxxx has introduced the Company
during the Term. Unless disputed by the Company, the names on such list shall
be
the only persons who, if they enter into Transactions with the Company as herein
provided, will entitle Xxxxxx to a Fee if a Commercial Transaction or M&A
Transaction occurs as herein provided.
9. This
Agreement may be terminated by the Company or by Xxxxxx upon 30 days notice
to
the other, provided that if Xxxxxx terminates this Agreement it shall return
to
the Company for cancellation warrants to purchase 75,000 shares or the benefit
achieved by Xxxxxx if it had previously exercised such warrants. In the event
of
any such termination, Xxxxxx shall nonetheless be entitled to a Fee with respect
to a Commercial Transaction or an M&A Transaction, if any, as provided in
the last sentence of Section 3.
10. The
parties hereto hereby agree to execute any and all such further documents or
instruments reasonably required by either party to carry out and effectuate
the
terms and conditions of this Agreement. This Agreement may only be assigned
with
written approval by both parties. This Agreement shall be binding upon and
shall
inure to the benefit of the parties hereto and their respective successors,
assigns and legal representatives.
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11. No
amendments, modifications or additions to this Agreement shall be binding unless
in writing and signed by both parties. In the event any provision in this
Agreement is held to be invalid, void, or unenforceable, all other provisions
of
the Agreement shall, nonetheless, remain in full force and effect and shall
in
no way be effected, impaired, or invalidated. The language used in this
Agreement shall be deemed to be the language chosen by the parties hereto to
express their mutual intent, and no rule of strict construction will be applied
against any person.
12. The
terms
of this Agreement shall be interpreted in accordance with the internal laws
of
the State of New York, without giving effect to any choice of law or conflict
of
law provision or rule (whether of the State of New York or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of New York. The parties hereto: (i) agree that any dispute
shall be heard in and by state or federal court located within the Southern
District of New York; (ii) hereby waive any objection to jurisdiction of said
courts with respect to any action instituted against them as provided herein;
and (iii) agree not to assert any defense based on lack of jurisdiction. Each
party hereto also waives personal service of any and all process upon it and
consents that all such service of process shall be made by certified mail
directly to said party at the address set forth below the signature of each
part’s authorized representative.
13. This
Agreement constitutes the entire agreement between the parties and supercedes
all prior understandings, and any memoranda of understanding with respect to
the
subject matter hereof.
14. Any
fee
payable to the Company hereunder shall be reduced by an amount equal to any
fee
or other remuneration directly or indirectly paid or payable to the Xxxxxx
by
the party to the Transaction other than the Company or any affiliates of such
other party.
15. It
is
understood that the Xxxxxx is an independent contractor and shall not be
considered (as the agent of the Company for any purposes whatsoever, and the
Xxxxxx is not granted any right or authority to assume or create any obligation
or liability, express or implied, on the Company’s behalf, or to bind the
Company in any manner or thing whatsoever.
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If
the
foregoing reflects your understanding of the terms of our agreement, please
sign
the duplicate copy of this letter and return it to me.
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Very
truly yours,
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Interactive
Systems Worldwide Inc.
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| By: | /s/ Xxxxxxx Xxxxxxxx | |
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Name: Xxxxxxx Xxxxxxxx |
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Title: Chairman
and Chief Executive Officer
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Xxxxxx
Capital Partners
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| /s/ Xxxxxx X. Xxxxxx | ||
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Name:
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Title:
Chief Investment Officer
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