July 13, 2010
ORB-FT
July
2010
July 13,
2010
Xx. Xxxxx
Xx
Chairman
and Chief Executive Officer
Shenzhen
ORB-FT New Material Co., Ltd
Dear
Xxxxx:
We are
pleased that Shenzhen ORB-FT New Material Co., Ltd, a China-Based company
(“ORB-FT” or the “Company”) has decided to
retain Maxim Group LLC (“Maxim”) to provide general
financial advisory and investment banking services to the Company as set forth
herein. This letter agreement (“Agreement”) will confirm
Maxim’s acceptance of such retention and set forth the terms of our
engagement.
1.
Retention. The
Company hereby retains Maxim as its financial advisor and investment banker to
provide general financial advisory and investment banking services, and Xxxxx
accepts such retention on the terms and conditions set forth in this
Agreement. In connection with this Agreement, Xxxxx may provide certain or
all of the following services: (collectively referred to as the “Advisory
Services”):
(a)
provide a valuation analysis of the Company including:
I.
Comparable company analysis; and a
II. Precedent
transaction analysis
(b)
assist management of the Company and advise the Company with respect to its
strategic planning process and business plans including an analysis of markets,
positioning, financial models, organizational structure, and potential strategic
alliances;
(c)
assist the Company in the identification of and merger into a publicly reporting
shell (the “Shell”)
company in a Reverse take-over transaction (“RTO”);
(d)
assist management of the Company with the preparation of the Company’s marketing
materials and investor presentations;
(e)
work closely with the Company’s management team to develop a set of long and
short-term goals with special focus on enhancing corporate and shareholder
value. This will include assisting the Company in determining key business
actions, including assistance with strategic partnership discussions and review
of financing requirements, intended to help enhance shareholder value; In
this regard, it is currently contemplated that the Company will, following
completion of the RTO, undertake a $3-$5 million private financing followed by a
larger secondary offering on a national U.S. exchange (of course any future
financing plans of the Company are subject to a multitude of factors, including
but not limited to: (a) overall market conditions, and (b) the future
financial performance of the Company, etc). The terms and conditions of
any financings undertaken by the Company will be memorialized in a separate
letter of engagement (the “Letter of Engagement”) with
Maxim in form substantially similar to the agreement provided in Exhibit B
which is to be executed immediately upon the closing of the RTO;
ORB-FT
July
2010
(f)
provide such other financial advisory and investment banking services upon which
the parties may mutually agree.
It is
currently contemplated that the owners of the Shell will retain 10% of the
Company’s equity ownership post-RTO and that Maxim will be a majority owner of
the Shell.
It is
expressly understood and agreed that Xxxxx shall be required to perform only
such tasks as may be necessary or desirable in connection with the rendering of
its services hereunder and therefore may not perform all of the tasks enumerated
above during the term of this Agreement. Moreover, it is further
understood that Maxim need not perform each of the above-referenced tasks in
order to receive the fees described in Section 3. It is further
understood that Xxxxx’s tasks may not be limited to those enumerated in this
paragraph but may include additional tasks at the request of the
Company.
2.
Information. In
connection with Xxxxx’s activities hereunder, the Company will cooperate with
Xxxxx and furnish Maxim upon reasonable request with all information regarding
the business, operations, properties, financial condition, management and
prospects of the Company (all such information so furnished being the “Information”) which Xxxxx
xxxxx appropriate and will provide Maxim with access to the Company’s officers,
directors, employees, independent accountants and legal counsel. The
Company represents and warrants to Maxim that all Information made available to
Maxim hereunder will be complete and correct in all material respects and will
not contain any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein not misleading in light
of the circumstances under which such statements are or will be made. The
Company further represents and warrants that any projections and other
forward-looking information provided by it to Maxim 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
recognizes and confirms that Maxim: (i) will use and rely primarily on the
Information and on information available from generally recognized public
sources in performing the services contemplated by this Agreement without having
independently verified the same; (ii) does not assume responsibility for
the accuracy or completeness of the Information and such other information; and
(iii) will not make an appraisal of any assets of the Company. Any
advice rendered by Maxim pursuant to this Agreement may not be disclosed
publicly without Xxxxx’s prior written consent unless such disclosure is
required by applicable law. Xxxxx hereby acknowledges that certain of the
Information received by Xxxxx may be confidential and/or proprietary, including
Information with respect to the Company’s technologies, products, business
plans, marketing, and other Information which must be maintained by Xxxxx as
confidential. Xxxxx agrees that it will not disclose such confidential
and/or proprietary information other than as necessary or appropriate to
performance of its services hereunder. Xxxxx agrees that the confidential
or proprietary information that it receives from the Company may include
material nonpublic information relating to the securities of the Company.
Xxxxx confirms that it will comply with all of the restrictions relating to such
information under applicable laws and regulations prohibiting securities
dealings by insiders in the United States including, but not limited to,
Rule 10b-5 promulgated by the United States Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended. Xxxxx
acknowledges and agrees that any such material non-public information that is
disclosed to it by the Company shall be disclosed in reliance upon this letter
and upon Rule 100(b)(2)(ii) of Regulation FD promulgated by the United
States Securities and Exchange Commission.
ORB-FT
July
2010
3.
Compensation.
As consideration for Xxxxx’s services pursuant to this Agreement, Xxxxx shall be
entitled to receive, and the Company agrees to pay Xxxxx, the following
compensation:
(a)
The Company shall pay to Maxim a non-refundable monthly fee of $3,000 (USD)
prior to the completion of any Financing and a non-refundable monthly fee of
$7,500 (USD) for the remainder of the term of this Agreement (as further
described in Section 8); however in no event shall the Company pay fewer
than six (6) monthly fee payments to Maxim. The monthly fee payments are
payable at the beginning of each month (the initial monthly fee shall be due
upon execution of this Agreement) and shall continue to be due on the first day
of each month until the termination of the Agreement (subject to the minimum six
month time period detailed in the preceding sentence). The monthly fee
payments shall be payable by wire or other immediately available funds.
The fees enumerated in Exhibit B are separate and apart from the monthly
fee payments enumerated earlier in this paragraph.
4.
Expenses.
In addition to payment to Xxxxx of the compensation set forth in Section 3
hereof, the Company shall promptly upon request from time to time reimburse
Maxim for all reasonable expenses (including, without limitation, fees and
disbursements of counsel and all travel and other out-of-pocket expenses)
incurred by Xxxxx in connection with its engagement hereunder. Maxim will
provide the Company an invoice and copies of receipts pursuant to its expenses
and such expenses shall not exceed $2,500 without prior authorization of the
Company; provided that the foregoing limitation and consent shall not apply to
legal fees.
5.
Indemnification.
The Company agrees to indemnify Maxim in accordance with the indemnification and
other provisions attached to this Agreement as Exhibit A (the
“Indemnification
Provisions”), which provisions are incorporated herein by reference and
shall survive the termination or expiration of this Agreement.
6.
Future
Rights. As additional consideration for its services hereunder and
as an inducement to cause Maxim to enter into this Agreement, if at any time
during the term of this Agreement or within twelve (12) months from the
effective date of the termination of this Agreement, the Company proposes to
effect a public offering of its securities on a US exchange, private placement
of securities or other financing, the Company shall offer to retain Xxxxx as
lead book running manager of such offering, or as its exclusive agent in
connection with such financing or other matter, upon such terms as the parties
may mutually agree, such terms to be set forth in a separate engagement letter
or other agreement between the parties. Such offer shall be made in
writing in order to be effective. Xxxxx shall notify the Company within
10 days of its receipt of the written offer contemplated above as to
whether or not it agrees to accept such retention. If Maxim should decline
such retention, the Company shall have no further obligations to Maxim, except
as specifically provided for herein.
ORB-FT
July
2010
7.
Other
Activities. The Company acknowledges that Maxim has been, and may
in the future be, engaged to provide services as an underwriter, placement
agent, finder, advisor and investment banker to other companies in the industry
in which the Company is involved. Subject to the confidentiality
provisions of Maxim contained in Section 2 hereof, the Company acknowledges
and agrees that nothing contained in this Agreement shall limit or restrict the
right of Maxim or of any member, manager, officer, employee, agent or
representative of Maxim, to be a member, manager, partner, officer, director,
employee, agent or representative of, investor in, or to engage in, any other
business, whether or not of a similar nature to the Company’s business, nor to
limit or restrict the right of Maxim to render services of any kind to any other
corporation, firm, individual or association. Maxim may, but shall not be
required to, present opportunities to the Company.
8.
Term and Termination;
Survival of Provisions. Either Maxim or the Company may terminate
this Agreement at any time upon 30 days’ prior written notice to the other
party after the six (6) month anniversary of this Agreement. In the event
of such termination, the Company shall pay and deliver to Maxim: (i) all
compensation earned through the date of such termination (“Termination Date”) pursuant to
any provision of Section 3 hereof, and (ii) all compensation which may
be earned by Xxxxx after the Termination Date pursuant to Section 3 hereof,
and shall reimburse Maxim for all expenses incurred by Xxxxx in connection with
its services hereunder pursuant to Section 4 hereof. All such fees
and reimbursements due to Maxim pursuant to the immediately preceding sentence
shall be paid to Maxim on or before the Termination Date (in the event such fees
and reimbursements are earned or owed as of the Termination Date) or upon the
closing of a financing (in the event such fees are due pursuant to the terms of
Section 3 hereof). Notwithstanding anything expressed or implied
herein to the contrary: (i) any other agreement entered into between Maxim
and the Company may only be terminated in accordance with the terms thereof,
notwithstanding an actual or purported termination of this Agreement, and
(ii) the terms and provisions of Sections 3, 4, 5 (including, but not
limited to, the Indemnification Provisions attached to this Agreement and
incorporated herein by reference), 6, 8, 9, 10, 11, 15 and 17 shall survive the
termination of this Agreement.
9.
Notices.
All notices will be in writing and will be effective when delivered in person or
sent via facsimile and confirmed by letter, to the party to whom it is addressed
at the following addresses or such other address as such party may advise the
other in writing:
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To
the Company:
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Xx.
Xxxxx Xx
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Chairman
and Chief Executive Officer
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Shenzhen
ORB-FT New Material Co., Ltd
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ORB-FT
July
2010
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To
Maxim:
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Xxxxx
Xxxxxx, Esq.
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Maxim
Group LLC
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000
Xxxxxxxxx Xxxxxx
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New
York, NY 10174
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Attention:
Xxxxx Xxxxxx
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Telephone:
(000) 000-0000
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Facsimile:
(000) 000-0000
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Xx.
Xxxxxxxx Xxxxxx
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Maxim
Group LLC
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000
Xxxxxxxxx Xxxxxx
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New
York, NY 10174
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Attention:
Xxxxxxxx Xxxxxx
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10.
Governing Law;
Jurisdiction; Waiver of Jury Trial. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York
applicable to agreements made and to be fully performed therein, without regard
to conflicts of law principles. The Company irrevocably submits to the
exclusive jurisdiction of any court of the State of New York or the United
States District Court for the Southern District of the State of New York for the
purpose of any suit, action or other proceeding arising out of this Agreement,
or any of the agreements or transactions contemplated hereby, which is brought
by or against the Company, and agrees that service of process in connection with
any such suit, action or proceeding may be made upon the Company in accordance
with Section 9 hereof. The parties hereby expressly waive all rights
to trial by jury in any suit, action or proceeding arising under this
Agreement.
11.
Amendments.
This Agreement may not be modified or amended except in a writing duly executed
by the parties hereto.
12.
Headings.
The section headings in this Agreement have been inserted as a matter of
reference and are not part of this Agreement.
13.
Successors and
Assigns. The benefits of this Agreement shall inure to the parties
hereto, their respective successors and assigns and to the indemnified parties
hereunder and their respective successors and assigns, and the obligations and
liabilities assumed in this Agreement shall be binding upon the parties hereto
and their respective successors and assigns. Notwithstanding anything
contained herein to the contrary, neither Maxim nor the Company shall assign any
of its obligations hereunder without the prior written consent of the other
party and any attempted assignment in violation of this section shall be null
and void.
14.
No Third Party
Beneficiaries. This Agreement does not create, and shall not be
construed as creating, any rights enforceable by any person or entity not a
party hereto, except those entitled to the benefits of the Indemnification
Provisions. Without limiting the foregoing, the Company acknowledges and
agrees that Xxxxx is not being engaged as, and shall not be deemed to be, an
agent or fiduciary of the Company’s stockholders or creditors or any other
person by virtue of this Agreement or the retention of Xxxxx xxxxxxxxx, all of
which are hereby expressly waived.
ORB-FT
July
2010
15.
Waiver.
Any waiver or any breach of any of the terms or conditions of this Agreement
shall not operate as a waiver of any other breach of such terms or conditions or
of any other term or condition, nor shall any failure to insist upon strict
performance or to enforce any provision hereof on any one occasion operate as a
waiver of such provision or of any other provision hereof or a waiver of the
right to insist upon strict performance or to enforce such provision or any
other provision on any subsequent occasion. Any waiver must be in
writing.
16.
Counterparts.
This Agreement may be executed in any number of counterparts and by facsimile
transmission, each of which shall be deemed to be an original instrument, but
all of which taken together shall constitute one and the same agreement.
Facsimile signatures shall be deemed to be original signatures for all
purposes.
17.
Hold
Harmless. The Company agrees that any and all decisions, acts,
actions, or omissions contemplated by the advisory services detailed in
Section 1 of this Agreement shall be the sole responsibility of the Company
and its management, and that the performance by Xxxxx of services hereunder will
in no way expose Xxxxx to any liability for any such decisions, acts, actions or
omissions of the company or management. It is understood and agreed that
this Section 17 is separate and distinct from the scope of the
indemnification provisions detailed in Exhibit A.
If the
terms of our engagement as set forth in this letter are satisfactory to you,
please confirm by signing and returning one copy of this letter, together with a
check or wire for $3,000 (USD) representing the initial monthly fee payment in
connection with the Agreement.
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Very
truly yours,
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MAXIM
GROUP LLC
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By:
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Xxxx
Xxxxxx
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Managing
Director, Investment Banking
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By:
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Xxxxxxxx
X. Xxxxxx
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Executive
Managing Director, Investment
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Banking
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Xxxxxx
to and accepted this 13th day of July, 2010
Shenzhen
ORB-FT New Material Co., Ltd
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By:
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Xxxxx
Xx,
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Chairman
of the Board and Chief Executive
Officer
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ORB-FT
July
2010
Exhibit
A
INDEMNIFICATION
PROVISIONS
Capitalized
terms used in this Exhibit shall have the meanings ascribed to such terms in the
Agreement to which this Exhibit is attached.
The
Company agrees to indemnify and hold harmless Maxim and each of the other
Indemnified Parties (as hereinafter defined) from and against any and all
losses, claims, damages, obligations, penalties, judgments, awards, liabilities,
costs, expenses and disbursements, and any and all actions, suits, proceedings
and investigations in respect thereof and any and all legal and other costs,
expenses and disbursements in giving testimony or furnishing documents in
response to a subpoena or otherwise (including, without limitation, the costs,
expenses and disbursements, as and when incurred, of investigating, preparing,
pursing or defending any such action, suit, proceeding or investigation (whether
or not in connection with litigation in which any Indemnified Party is a party))
(collectively, “Losses”), directly or
indirectly, caused by, relating to, based upon, arising out of, or in connection
with, Maxim’s acting for the Company, including, without limitation, any act or
omission by Maxim in connection with its acceptance of or the performance or
nonperformance of its obligations under the Agreement between the Company and
Maxim to which these indemnification provisions are attached and form a part
(the “Agreement”), any
breach by the Company of any representation, warranty, covenant or agreement
contained in the Agreement (or in any instrument, document or agreement relating
thereto, including any Agency Agreement), or the enforcement by Maxim of its
rights under the Agreement or these indemnification provisions, except to the
extent that any such Losses are found in a final judgment by a court of
competent jurisdiction (not subject to further appeal) to have resulted
primarily and directly from the gross negligence or willful misconduct of the
Indemnified Party seeking indemnification hereunder. The Company also
agrees that no Indemnified Party shall have any liability (whether direct or
indirect, in contract or tort or otherwise) to the Company for or in connection
with the engagement of Maxim by the Company or for any other reason, except to
the extent that any such liability is found in a final judgment by a court of
competent jurisdiction (not subject to further appeal) to have resulted
primarily and directly from such Indemnified Party’s gross negligence or willful
misconduct.
These
Indemnification Provisions shall extend to the following persons (collectively,
the “Indemnified
Parties”): Maxim, its affiliated entities, managers, members, officers,
employees, legal counsel, agents and controlling persons (within the meaning of
the federal securities laws), and the officers, directors, partners,
stockholders, members, managers, employees, legal counsel, agents and
controlling persons of any of them. These indemnification provisions shall
be in addition to any liability which the Company may otherwise have to any
Indemnified Party.
ORB-FT
July
2010
If any
action, suit, proceeding or investigation is commenced, as to which an
Indemnified Party proposes to demand indemnification, it shall notify the
Company with reasonable promptness; provided, however, that any failure by an
Indemnified Party to notify the Company shall not relieve the Company from its
obligations hereunder unless such failure materially prejudices the Company’s
ability to defend itself in such action. An Indemnified Party shall have
the right to retain counsel of its own choice to represent it, and the
reasonable fees, expenses and disbursements of such counsel shall be borne by
the Company. Any such counsel shall, to the extent consistent with its
professional responsibilities, cooperate with the Company and any counsel
designated by the Company. The Company shall be liable for any settlement
of any claim against any Indemnified Party made with the Company’s written
consent. The Company shall not, without the prior written consent of
Xxxxx, settle or compromise any claim, or permit a default or consent to the
entry of any judgment in respect thereof, unless such settlement, compromise or
consent (i) includes, as an unconditional term thereof, the giving by the
claimant to all of the Indemnified Parties of an unconditional release from all
liability in respect of such claim, and (ii) does not contain any factual
or legal admission by or with respect to an Indemnified Party or an adverse
statement with respect to the character, professionalism, expertise or
reputation of any Indemnified Party or any action or inaction of any Indemnified
Party.
In order
to provide for just and equitable contribution, if a claim for indemnification
pursuant to these indemnification provisions is made but it is found in a final
judgment by a court of competent jurisdiction (not subject to further appeal)
that such indemnification may not be enforced in such case, even though the
express provisions hereof provide for indemnification in such case, then the
Company shall contribute to the Losses to which any Indemnified Party may be
subject (i) in accordance with the relative benefits received by the
Company and its stockholders, subsidiaries and affiliates, on the one hand, and
the Indemnified Party, on the other hand, and (ii) if (and only if) the
allocation provided in clause (i) of this sentence is not permitted by
applicable law, in such proportion as to reflect not only the relative benefits,
but also the relative fault of the Company, on the one hand, and the Indemnified
Party, on the other hand, in connection with the statements, acts or omissions
which resulted in such Losses as well as any relevant equitable
considerations. No person found liable for a fraudulent misrepresentation
shall be entitled to contribution from any person who is not also found liable
for fraudulent misrepresentation. The relative benefits received (or
anticipated to be received) by the Company and it stockholders, subsidiaries and
affiliates shall be deemed to be equal to the aggregate consideration payable or
receivable by such parties in connection with the transaction or transactions to
which the Agreement relates relative to the amount of fees actually received by
Maxim in connection with such transaction or transactions. Notwithstanding
the foregoing, in no event shall the amount contributed by all Indemnified
Parties exceed the amount of fees previously received by Maxim pursuant to the
Agreement.
Neither
termination nor completion of the Agreement shall affect these Indemnification
Provisions which shall remain operative and in full force and effect. The
Indemnification Provisions shall be binding upon the Company and its successors
and assigns and shall inure to the benefit of the Indemnified Parties and their
respective successors, assigns, heirs and personal representatives.
ORB-FT
July
2010
Exhibit
B
Letter
of Engagement
[_____________,
2010]
Xx. Xxxxx
Xx
Chairman
and Chief Executive Officer
Shenzhen
ORB-FT New Material Co., Ltd
RE:
Private Placement of
Securities
Dear
Xxxxx:
This
letter confirms our agreement that Shenzhen ORB-FT New Material Co., Ltd
((collectively with its owned or controlled subsidiaries, “ORB-FT” or the “Company”) has engaged Maxim
Group LLC (together with its affiliates and subsidiaries, “Maxim” or the “Placement Agent”) to act as
the Company’s exclusive Placement Agent in connection with the proposed private
placement (the “Offering”) of equity,
equity-linked, convertible and debt securities (the “Securities”) of the
Company. The precise terms of the Securities and the gross proceeds of
such Offering will be negotiated between the Placement Agent and the Company
with one or more accredited investors (described below). The gross
proceeds of the Offering will be up to $5,000,000 on the terms and conditions
set forth herein.
Upon
acceptance, (indicated by your signature below), this letter agreement (the
“Agreement”) will
confirm the terms of the engagement between the Placement Agent and the
Company.
1.
Appointment.
(a)
Subject to the terms and conditions of this Agreement, the Company hereby
retains the Placement Agent, and the Placement Agent xxxxxx agrees to act, as
the Company’s exclusive Placement Agent in connection with the Offering.
As Placement Agent for the Offering, Xxxxx will advise and assist the Company in
identifying and assisting the Company in issuing the Securities to, one or more
accredited Investors (“Investors”) in the
Offering. The Company acknowledges and agrees that the Placement Agent is
only required to use its “commercially reasonable efforts” in connection with
the Offering and that this Agreement does not constitute a commitment by the
Placement Agent to purchase the Securities or introduce the Company to
Investors, nor does this Agreement constitute a representation or warranty on
the part of the Placement Agent that any Offering will be consummated. The
Company retains the right to determine all of the terms and conditions of the
Offering and to accept or reject any proposals submitted to it by the Placement
Agent in its sole and absolute discretion.
ORB-FT
July
2010
(b)
In furtherance of the Company’s agreement that the Placement Agent’s retention
hereunder shall be exclusive, during the Term of this Agreement (as such term is
hereinafter defined), neither the Company nor any of its subsidiaries will,
directly or indirectly, solicit or otherwise encourage the submission of any
proposal or offer (“Investment
Proposal”) from any person or entity relating to any issuance of the
Company’s or any of its subsidiaries’ equity securities (including debt
securities with any equity feature) or participate in any discussions regarding
an Investment Proposal. The term “Investment Proposal” shall not include
(i) any investment in the equity securities of any other entity, and
(ii) any transaction or agreement with one or more persons, firms or
entities designated as a “strategic partner” of the Company, as determined in
good faith by the Board of Directors of the Company, provided that each such
person, firm or entity is, itself or through its subsidiaries, an operating
company in a business synergistic with the business of the Company and in which
the Company receives benefits in addition to the investment of funds, but shall
not include a transaction in which the Company is issuing securities primarily
for the purpose of raising capital or to an entity whose primary business is
investing in securities. The Company will immediately cease all contacts,
discussions and negotiations with third parties regarding any Investment
Proposal.
2.
Information.
(a)
The Company recognizes that, in completing its engagement hereunder, the
Placement Agent will be using and relying on both publicly available information
and on data, material and other information (including non-public information
provided by the Company to Maxim) furnished to Placement Agent by the Company or
the Company’s affiliates and agents. The Company will cooperate with Maxim
and furnish, and cause to be furnished, to Maxim, any and all information and
data concerning the Company, its subsidiaries and the Offering that Maxim
reasonably deems appropriate, including, without limitation, the Company’s
acquisition and/or merger plans and plans for raising capital or additional
financing that is reasonably requested by Xxxxx (the “Information”), including a
description of risk factors, if any (the “Private Placement
Materials”). Any Information and Private Placement Materials
forwarded to prospective Investors will be in form reasonably acceptable to
Placement Agent and its counsel. The Company represents and warrants that
all Information and Private Placement Materials, including, but not limited to,
the Company’s financial statements, will be complete and correct in all material
respects and will not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein not
misleading.
(b)
It is further agreed that Xxxxx will conduct a due diligence investigation of
the Company and the Company will reasonably cooperate with such investigation as
a condition of Maxim’ obligations hereunder. The Company recognizes and
confirms that the Placement Agent: (i) will use and rely primarily on the
Information, the Private Placement Materials and information available from
generally recognized public sources in performing the services contemplated by
this letter without having independently verified the same; (ii) is
authorized as the Placement Agent to transmit to any prospective investors a
copy or copies of the Private Placement Materials, forms of subscription
documents and any other legal documentation supplied to the Placement Agent for
transmission to any appropriate qualified prospective investors by or on behalf
of the Company or by any of the Company’s officers, representatives or agents,
in connection with the performance of the Placement Agent’s services hereunder
or any transaction contemplated hereby; (iii) does not assume
responsibility for the accuracy or completeness of the Information or the
Private Placement Materials and such other information, if any provided to the
Investors; (iv) will not make an appraisal of any assets of the Company or
the Company generally; and (v) retains the right to continue to perform due
diligence of the Company, its business and its officers and directors during the
course of the engagement.
ORB-FT
July
2010
(c)
Until the date that is two years from the date hereof, Xxxxx will keep all
information obtained from the Company confidential except: (i) Information
which is otherwise publicly available, or previously known to or obtained by,
Xxxxx independently of the Company and without breach of any of Maxim’
agreements with the Company; (ii) Maxim may disclose such information to
its officers, directors, employees, agents and representatives, and to its other
advisors and financial sources on a need to know basis only and will ensure that
all such persons will keep such information strictly confidential. No such
obligation of confidentiality shall apply to information that: (i) is in
the public domain as of the date hereof or hereafter enters the public domain
without a breach by Xxxxx, (ii) was known or became known by Maxim prior to
the Company’s disclosure thereof to Maxim, (iii) becomes known to Maxim
from a source other than the Company, and other than by the breach of an
obligation of confidentiality owed to the Company, (iv) is disclosed by the
Company to a third party without restrictions on its disclosure, (v) is
independently developed by Xxxxx without access to or use of the confidential
information or (vi) is required to be disclosed by Maxim or its officers,
directors, employees, agents, attorneys and to its other advisors and financial
sources, pursuant to any order of a court of competent jurisdiction or other
governmental body or as may otherwise be required by law. Xxxxx agrees
that the confidential or proprietary information that it receives from the
Company may include material non-public information relating to the securities
of the Company. Xxxxx confirms that it will comply with all of the
restrictions relating to such information under applicable laws and regulations
prohibiting securities dealings by insiders in the United States including, but
not limited to, Rule 10b-5 promulgated by the United States Securities and
Exchange Commission under the Securities Exchange Act of 1934, as amended.
Xxxxx acknowledges and agrees that any such material non-public information that
is disclosed to it by the Company shall be disclosed in reliance upon this
letter and upon Rule 100(b)(2)(ii) of Regulation FD promulgated by the
United States Securities and Exchange Commission.
(d)
The Company recognizes that in order for Maxim to perform properly its
obligations in a professional manner, the Company will keep Maxim informed of
and, to the extent practicable, permit Maxim to participate in meetings and
discussions between the Company and any third party relating to the matters
covered by the terms of Xxxxx’s engagement. If at any time during the
course of Xxxxx’s engagement, the Company becomes aware of any material change
in any of the information previously furnished to Maxim, it will promptly advise
Maxim of the change.
3.
Compensation.
As compensation for services rendered and to be rendered hereunder by Placement
Agent, the Company agrees to pay Placement Agent the following fees in
consideration of the services rendered by the Placement Agent in connection with
the Offering and Transaction:
(a)
The Company agrees to pay Xxxxx a cash fee payable upon each closing of the
Offering contemplated by this Agreement (“Closing”) equal to eight
percent (8.0%) of the gross proceeds received by the Company from Investors at
each Closing (the “Placement
Fee”).
ORB-FT
July
2010
(b)
The Company shall provide that, at the Closing, the Company shall grant to Maxim
(or its designated affiliates or assignees) common stock share purchase warrants
(the “Warrants”)
covering a number of common stock shares of Securities equal to eight percent
(8.0%) of the total number of Securities being sold and/or issued in the
Offering. The Warrants will be non-exercisable for six (6) months after
the date of the Closing and will be exercisable and expire five (5) years after
the Closing. The Warrants will be exercisable at a price equal to 100% of
the offering price in connection with the Offering. The Warrants shall not
be redeemable. The Company will provide piggyback registration rights
covering the shares of Common Stock underlying the Warrants and will file all
necessary undertakings in connection therewith. The Warrants may not be
transferred, assigned or hypothecated for a period of six (6) months following
the Closing, except that they may be assigned, in whole or in part, to any
successor, officer, manager or member of Maxim (or to officers, managers or
member of any such successor of member). The Warrants may be exercised as
to all or a lesser number of shares of Securities, may provide for cashless
exercise, and will provide for any weighted-average anti-dilution or price
protection.
(c)
In addition to any fees payable to Xxxxx xxxxxxxxx, the Company hereby agrees to
reimburse Xxxxx for all reasonable travel and other out-of-pocket expenses
incurred in connection with Xxxxx’s engagement, including the reasonable fees
and expenses of Xxxxx’s counsel. Such reimbursement shall not exceed
$50,000 without prior written approval by the Company, which includes a
non-refundable initial cash expense retainer of $25,000 (USD) that will be
payable upon execution of this Agreement. The non-refundable cash expense
retainer shall be paid either by wire or by certified funds.
(d)
The Company shall assist and cooperate with legal counsel to Maxim in effecting
a filing with respect to the public offering contemplated by the Registration
Statement to be filed in connection with the Offering (an “Issuer Filing”) with the
Financial Industry Regulatory Authority (“FINRA”) Corporate Financing
Department pursuant to FINRA Rule 2710(b)(10)(A)(i) and the Company shall
pay the filing fee required by such Issuer Filing and the fees and expenses of
counsel to Maxim in connection with the Issuer Filing and clearing such filing
with FINRA. The Company shall assist legal counsel to Xxxxx in pursuing
the Issuer Filing until FINRA issues a letter confirming that it does not object
to the terms of the Offering contemplated by the Registration
Statement.
4.
Term of
Engagement.
(a)
This Agreement will remain in effect until 6 months from the date of execution,
after which either party shall have the right to terminate it on thirty (30)
days prior written notice to the other. The date of termination of this
Agreement is referred to herein from time to time as the “Termination
Date.” The period of time during which this Agreement remains in effect is
referred to herein from time to time as the “Term”. If, within twelve
months after the Termination Date, the Company completes any financing of
equity, equity-linked or convertible securities or other capital raising
activity of the Company (other than the exercise by any person or entity of any
options, warrants or other convertible securities other than the warrants issued
pursuant to this Agreement) with any of the Investors who were first introduced
to the Company in connection with the financing contemplated hereby by Xxxxx or
with whom Maxim communicated with during the Term, the Company will pay to Maxim
upon the closing of such financing the compensation set forth in
Sections 3(a), 3(b) and 3(c) as a “Source Fee”. Within 10 days
after request by the Company following the Termination Date, Maxim shall provide
the Company with a list of potential investors who were first introduced to the
Company in connection with the financing contemplated hereby by Xxxxx or with
whom Xxxxx communicated with during the Term.
ORB-FT
July
2010
(b)
Notwithstanding anything herein to the contrary, subject to the six months
limitation described in Section 4(a) above, the obligation to pay the
compensation and expenses described in Section 3, this Section 4,
Sections 6 and 8-12, 14-16 and all of Exhibit A attached, hereto (the
terms of which are incorporated by reference hereto), will survive any
termination or expiration of this Agreement. The termination of this
Agreement shall not affect the Company’s obligation to pay fees to the extent
provided for in Section 3 herein and shall not affect the Company’s
obligation to reimburse the expenses accruing prior to such termination to the
extent provided for herein. All such fees and reimbursements due shall be
paid to the Placement Agent on or before the Termination Date (in the event such
fees and reimbursements are earned or owed as of the Termination Date) or upon
the closing of the Offering or any applicable portion thereof (in the event such
fees are due pursuant to the terms of Section 3 hereof).
5.
Certain
Placement Procedures. The Company and the Placement Agent each
represents to the other that it has not taken, and the Company and the Placement
Agent each agrees with the other that it will not take any action, directly or
indirectly, so as to cause the Offering to fail to be entitled to rely upon the
exemption from registration afforded by Section 4(2) of the Securities Act
of 1933, as amended (the “Act”). In effecting the
Offering, the Company and the Placement Agent each agrees to comply in all
material respects with applicable provisions of the Act and any regulations
thereunder and any applicable state laws and requirements. The Company
agrees that any representations and warranties made by it to any Investor in the
Offering shall be deemed also to be made to the Placement Agent for its
benefit. The Company agrees that it shall cause any opinion of its counsel
delivered to any Investors in the Offering also to be addressed and delivered to
the Placement Agent, or to cause such counsel to deliver to the Placement Agent
a letter authorizing it to rely upon such opinion.
6.
Indemnification.
The Company agrees to indemnify Placement Agent in accordance with the
indemnification and other provisions attached to the Agreement as Exhibit A
(the “Indemnification
Provisions”), which provisions are incorporated herein by reference and
shall survive the termination or expiration of the Agreement.
7.
Other
Activities. The Company acknowledges that Maxim has been, and may
in the future be, engaged to provide services as an underwriter, placement
agent, finder, advisor and investment banker to other companies in the industry
in which the Company is involved. Subject to the confidentiality
provisions of Maxim contained in Section 2 hereof, the Company acknowledges
and agrees that nothing contained in this Agreement shall limit or restrict the
right of Maxim or of any member, manager, officer, employee, agent or
representative of Maxim, to be a member, manager, partner, officer, director,
employee, agent or representative of, investor in, or to engage in, any other
business, whether or not of a similar nature to the Company’s business, nor to
limit or restrict the right of Maxim to render services of any kind to any other
corporation, firm, individual or association; provided that Maxim and any of its
member, manager, officer, employee, agent or representative shall not use the
Information to the detriment of the Company. Maxim may, but shall not be
required to, present opportunities to the Company.
ORB-FT
July
2010
8.
Governing
Law; Jurisdiction; Waiver of Jury Trial. This Agreement will be
governed as to validity, interpretation, construction, effect and in all other
respects by the internal law of the State of New York. The Company and
Maxim each (i) agree that any legal suit, action or proceeding arising out
of or relating to this Agreement shall be instituted exclusively in the New York
State Supreme Court, County of New York, or in the United States District Court
for the Southern District of New York, (ii) waives any objection to the
venue of any such suit, action or proceeding, and the right to assert that such
forum is an inconvenient forum, and (iii) irrevocably consents to the
jurisdiction of the New York State Supreme Court, County of New York, and the
United States District Court for the Southern District of New York in any such
suit, action or proceeding. Each of the Company and Xxxxx further agrees
to accept and acknowledge service of any and all process that may be served in
any such suit, action or proceeding in the New York State Supreme Court, County
of New York, or in the United States District Court for the Southern District of
New York and agree that service of process upon it mailed by certified mail to
its address shall be deemed in every respect effective service of process in any
such suit, action or proceeding. The parties hereby expressly waive all
rights to trial by jury in any suit, action or proceeding arising under this
Agreement.
9.
Securities
Law Compliance. The Company, at its own expense, will use its best
efforts to obtain any registration or qualification required to sell any
Securities under the Blue Sky laws of any applicable jurisdictions.
10.
Representations
and Warranties. The Company and Maxim each respectively represent
and warrant that: (a) it has full right, power and authority to enter into
this Agreement and to perform all of its obligations hereunder; (b) this
Agreement has been duly authorized and executed and constitutes a legal, valid
and binding agreement of such party enforceable in accordance with its terms;
and (c) the execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby does not conflict with or result in a
breach of (i) such party’s certificate of incorporation or by-laws or
(ii) any agreement to which such party is a party or by which any of its
property or assets is bound. Lastly, the Company agrees that any and all
decisions, acts, actions, or omissions with respect to the Transaction shall be
the sole responsibility of the Company, and that the performance by Xxxxx of
services hereunder will in no way expose Xxxxx to any liability for any such
decisions, acts, actions or omissions of the Company.
ORB-FT
July
2010
11.
Parties;
Assignment; Independent Contractor; No Tax Advice. This Agreement
has been and is made solely for the benefit of Maxim and the Company and each of
the persons, agents, employees, officers, directors and controlling persons
referred to in Exhibit A and their respective heirs, executors, personal
representatives, successors and assigns, and nothing contained in this Agreement
will confer any rights upon, nor will this Agreement be construed to create any
rights in, any person who is not party to such Agreement, other than as set
forth in this paragraph. The rights and obligations of either party under
this Agreement may not be assigned without the prior written consent of the
other party hereto and any other purported assignment will be null and
void. Xxxxx has been retained under this Agreement as an independent
contractor, and it is understood and agreed that this Agreement does not create
a fiduciary relationship between Xxxxx and the Company or their respective
Boards of Directors. Xxxxx shall not be considered to be the agent of the
Company for any purpose whatsoever and Xxxxx 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 whatsoever.
The Company acknowledges that the Placement Agent does not provide accounting,
tax or legal advice. The Company is authorized, however, subject to
applicable law, to disclose any and all aspects of the Offering that are
necessary to support any U.S. federal income tax benefits expected to be claimed
with respect to such transaction, and all materials of any kind (including tax
opinions and other tax analyses) related to those benefits.
12.
Validity.
In case any term of this Agreement will be held invalid, illegal or
unenforceable, in whole or in part, the validity of any of the other terms of
this Agreement will not in any way be affected thereby.
13.
Counterparts.
This Agreement may be executed in counterparts and each of such counterparts
will for all purposes be deemed to be an original, and such counterparts will
together constitute one and the same instrument.
14.
Notices.
All notices will be in writing and will be effective when delivered in person or
sent via facsimile and confirmed by letter, to the party to whom it is addressed
at the following addresses or such other address as such party may advise the
other in writing:
|
To
the Company:
|
Xx.
Xxxxx Xx
|
|
|
Chairman
and Chief Executive Officer
|
|
|
Shenzhen
ORB-FT New Material Co., Ltd
|
|
To
Maxim:
|
Maxim
Group LLC
|
|
|
000
Xxxxxxxxx Xxxxxx
|
|
|
New
York, NY 10174
|
|
|
Attention:
Xxxxx Xxxxxx
|
|
|
Telephone:
(000) 000-0000
|
|
|
Facsimile:
(000) 000-0000
|
|
|
Maxim
Group LLC
|
|
|
000
Xxxxxxxxx Xxxxxx
|
|
|
New
York, NY 10174
|
|
|
Attention:
Xx. Xxxxxxxx Xxxxxx
|
|
|
Telephone:
(000) 000-0000
|
|
|
Facsimile:
(000) 000-0000
|
15.
Best
Efforts Engagement for Capital Raising. It is expressly understood
and acknowledged that Xxxxx’s engagement for the Offering does not constitute
any commitment, express or implied, on the part of Maxim or of any of its
affiliates to purchase or place the Company’s securities or to provide any type
of financing and that the Offering will be conducted by Xxxxx on a “best
efforts” basis.
ORB-FT
July
2010
16.
Press
Announcements. The Company agrees that Maxim shall, upon a
successful transaction, have the right to place advertisements in financial and
other newspapers and journals at its own expense describing its services to the
Company hereunder, provided that Maxim shall submit a copy of any such
advertisement to the Company for its approval, such approval not to be
unreasonably withheld, conditioned or delayed.
We are
delighted at the prospect of working with you and look forward to proceeding
with the offering. If you are in agreement with the foregoing, please
execute and return two copies of this Agreement to the undersigned, along with
either a wire or check of certified funds in the amount of $25,000 representing
the non-refundable cash retainer detailed in Section 3(c) of the engagement
letter. This Agreement may be executed in counterparts, electronic mail
and by facsimile transmission.
|
Very
truly yours,
|
||
|
MAXIM
GROUP LLC
|
||
|
By:
|
||
|
Xxxx
Xxxxxx
|
||
|
Managing
Director, Investment Banking
|
||
|
By:
|
||
|
Xxxxxxxx
X. Xxxxxx
|
||
|
Executive
Managing Director, Investment
|
||
|
Banking
|
||
Agreed
to and accepted this ___st day of _____, 2010
Shenzhen
ORB-FT New Material Co., Ltd
|
By:
|
||
|
Xxxxx
Xx,
|
||
|
Chairman
of the Board and Chief Executive
Officer
|
||
ORB-FT
July
2010
Exhibit
A
INDEMNIFICATION
PROVISIONS
Capitalized
terms used in this Exhibit shall have the meanings ascribed to such terms in the
Agreement to which this Exhibit is attached.
The
Company agrees to indemnify and hold harmless Placement Agent and each of the
other Indemnified Parties (as hereinafter defined) from and against any and all
losses, claims, damages, obligations, penalties, judgments, awards, liabilities,
costs, expenses and disbursements, and any and all actions, suits, proceedings
and investigations in respect thereof and any and all legal and other costs,
expenses and disbursements in giving testimony or furnishing documents in
response to a subpoena or otherwise (including, without limitation, the costs,
expenses and disbursements, as and when incurred, of investigating, preparing,
pursing or defending any such action, suit, proceeding or investigation (whether
or not in connection with litigation in which any Indemnified Party is a party))
(collectively, “Losses”), directly or indirectly, caused by, relating to, based
upon, arising out of, or in connection with, Placement Agent’s acting for the
Company, including, without limitation, any act or omission by Placement Agent
in connection with its acceptance of or the performance or non-performance of
its obligations under the Agreement between the Company and Placement Agent to
which these indemnification provisions are attached and form a part, any breach
by the Company of any representation, warranty, covenant or agreement contained
in the Agreement (or in any instrument, document or agreement relating thereto,
including any agency agreement), or the enforcement by Placement Agent of its
rights under the Agreement or these indemnification provisions, except to the
extent that any such Losses are found in a final judgment by a court of
competent jurisdiction (not subject to further appeal) to have resulted
primarily and directly from the gross negligence or willful misconduct of the
Indemnified Party seeking indemnification hereunder.
The
Company also agrees that no Indemnified Party shall have any liability (whether
direct or indirect, in contract or tort or otherwise) to the Company for or in
connection with the engagement of Placement Agent by the Company or for any
other reason, except to the extent that any such liability is found in a final
judgment by a court of competent jurisdiction (not subject to further appeal) to
have resulted primarily and directly from such Indemnified Party’s gross
negligence or willful misconduct.
These
Indemnification Provisions shall extend to the following persons (collectively,
the “Indemnified Parties”): Placement Agent, its affiliated entities, managers,
members, officers, employees, legal counsel, agents and controlling persons
(within the meaning of the federal securities laws), and the officers,
directors, partners, stockholders, members, managers, employees, legal counsel,
agents and controlling persons of any of them. These indemnification
provisions shall be in addition to any liability, which the Company may
otherwise have to any Indemnified Party.
ORB-FT
July
2010
If any
action, suit, proceeding or investigation is commenced, as to which an
Indemnified Party proposes to demand indemnification, it shall notify the
Company with reasonable promptness; provided, however, that any
failure by an Indemnified Party to notify the Company shall not relieve the
Company from its obligations hereunder unless such failure materially prejudices
the Company’s ability to defend itself in such action. An Indemnified
Party shall have the right to retain counsel of its own choice to represent it,
and the reasonable fees, expenses and disbursements of such counsel shall be
borne by the Company. Any such counsel shall, to the extent consistent
with its professional responsibilities, cooperate with the Company and any
counsel designated by the Company. The Company shall be liable for any
settlement of any claim against any Indemnified Party made with the Company’s
written consent. The Company shall not, without the prior written consent
of Placement Agent, settle or compromise any claim, or permit a default or
consent to the entry of any judgment in respect thereof, unless such settlement,
compromise or consent (i) includes, as an unconditional term thereof, the
giving by the claimant to all of the Indemnified Parties of an unconditional
release from all liability in respect of such claim, and (ii) does not
contain any factual or legal admission by or with respect to an Indemnified
Party or an adverse statement with respect to the character, professionalism,
expertise or reputation of any Indemnified Party or any action or inaction of
any Indemnified Party.
In order
to provide for just and equitable contribution, if a claim for indemnification
pursuant to these indemnification provisions is made but it is found in a final
judgment by a court of competent jurisdiction (not subject to further appeal)
that such indemnification may not be enforced in such case, even though the
express provisions hereof provide for indemnification in such case, then the
Company shall contribute to the Losses to which any Indemnified Party may be
subject (i) in accordance with the relative benefits received by the
Company and its stockholders, subsidiaries and affiliates, on the one hand, and
the Indemnified Party, on the other hand, and (ii) if (and only if) the
allocation provided in clause (i) of this sentence is not permitted by
applicable law, in such proportion as to reflect not only the relative benefits,
but also the relative fault of the Company, on the one hand, and the Indemnified
Party, on the other hand, in connection with the statements, acts or omissions
which resulted in such Losses as well as any relevant equitable
considerations. No person found liable for a fraudulent
misrepresentation shall be entitled to contribution from any person who is not
also found liable for fraudulent misrepresentation. The relative
benefits received (or anticipated to be received) by the Company and its
stockholders, subsidiaries and affiliates shall be deemed to be equal to the
aggregate consideration payable or receivable by such parties in connection with
the transaction or transactions to which the Agreement relates relative to the
amount of fees actually received by Placement Agent in connection with such
transaction or transactions. Notwithstanding the foregoing, in no
event shall the amount contributed by all Indemnified Parties exceed the amount
of fees previously received by Placement Agent pursuant to the
Agreement.
Neither
termination nor completion of the Agreement shall affect these Indemnification
Provisions which shall remain operative and in full force and
effect. The Indemnification Provisions shall be binding upon the
Company and its successors and assigns and shall inure to the benefit of the
Indemnified Parties and their respective successors, assigns, heirs and personal
representatives.
