HARBORVIEW CAPITAL MANAGEMENT, LLC New York, NY 10022 Tel: (646) 218-1400
HARBORVIEW
CAPITAL MANAGEMENT, LLC
000 Xxxxx
Xxxxxx, Xxxxx 0000
New York,
NY 10022
Tel:
(000) 000-0000
April 15,
2010
Xxxxxxxx
Xxxxxx
Chief
Executive Officer
0000
Xxxxxxxx Xxxxx, Xxxxx 000X
Bannockburn,
Illinois 60015
Dear Xx.
Xxxxxx:
This
letter confirms our understanding that Harborview Capital Management, LLC (“HCM”) has been engaged to
act as a non-exclusive financial advisor and consultant in connection with
strategic planning and a capital raise (“Private Placement”) to meet
current and ongoing capital needs of Statmon Technologies Corp. (“the Company”). HCM
in this capacity will work with management and review and advise the Company on
strategic issues as reasonably requested by the Company and help identify
funding opportunities for a period of twelve months (the “Term”) from the date
of this Agreement. Upon the Company’s acceptance, this letter agreement (“Agreement”) will confirm the
terms of the engagement agreed to between HCM and the Company on the terms set
forth herein. The terms of HCM’s engagement are as
follows:
1.
Relationship of Parties. Nothing contained in this Agreement
shall be construed to place HCM and the Company in the relationship of partners
or joint ventures. Neither HCM nor the Company shall represent itself
as the representative or legal representative of the other for any purpose
whatsoever nor shall either have the power to obligate or bind the other in any
manner whatsoever. The Company’s engagement of HCM is not intended to
confer rights upon any person not a party hereto (including shareholders,
directors, officers, employees or creditors of the Company) as against HCM or
its affiliates, or their respective directors, officers, employees or
representatives, successors or assigns. HCM, in performing its
services hereunder, shall at all times be an independent
contractor. No promises or representations have been made, except as
expressly set forth in this Agreement, and the parties have not relied on any
promises or representations except as expressly set forth in this
Agreement. Nothing contained herein should be construed as creating
any fiduciary duties between the parties, or between HCM and the
Company.
2. Terms of
the Transaction(s). It is the sole discretion of the Company
to accept or reject the terms of any proposed transaction.
3. Compensation. As
compensation for services rendered and to be rendered hereunder by HCM, the
Company agrees to pay HCM as follows:
(a) One
million and eight hundred thousand (1,800,000)restricted shares of common stock
of the Company; and
(b) The
Company will reimburse HCM in a timely manner for all out-of-pocket expenses
relating to activities under this Agreement, including without limitation,
travel and other related expenses as well as the legal fees incurred by HCM and
its members, provided that HCM obtains the Company’s prior written consent for
such proposed expenditures. Such reimbursements shall be made
promptly upon submission by HCM.
4. .Private Placement
Fee. To the extent permitted by law, as compensation for its
services in connection with a Private Placement, the Company shall pay to HCM or
its designee a cash placement fee equal to ten percent (10%) of the aggregate
purchase price paid by each purchaser of securities placed in the Private
Placement (the “Placement
Agent’s Fee”) that occurs through HCM’s services under this Agreement at
each closing (“Placement
Closing”). The Placement Agent’s Fee will be deducted from the
gross proceeds of the securities sold at each Placement Closing. The
Company will deduct from the Placement Agent’s Fee any amounts it owes to any
other party (the “Additional
Placement Agents”) in the way of commissions or similar fees in
connection with the Private Placement.
Warrants. In addition to the
Placement Agent’s Fee, upon the closing of the sale of securities in connection
with the offering, the Company shall issue to HCM or its designee warrants to
purchase a number of shares of the Company’s common stock equal to ten percent
(10%) of the gross proceeds of the sale of securities (the “PA Warrants”). The
PA Warrants shall be exercisable at 100% of the offering price of the securities
sold. The PA Warrants shall expire five (5) years from the date of
issuance. The PA Warrants shall be in the same form, including,
without limitation, the same registration rights and anti-dilution provisions,
as the securities sold in the offering; provided, however, the PA Warrants shall
include a “net issuance” cashless exercise feature. The Company shall
reduce the number of PA Warrants to be issued to HCM by the number of warrants
that the Company owes and issues to the Additional Placement
Agents.
Fee Tail. HCM or
its designee shall be entitled to a Placement Agent’s Fee, calculated in the
manner provided in this Paragraph 4, with respect to any securities purchased in
any subsequent offering (“Subsequent Offering”) by
investors whom HCM or its designee had introduced to the Company during the Term
if such Subsequent Offering is consummated at any time within (i) the 12-month
period following the consummation of the offering and (ii) if no offering shall
have been consummated during the Term, the 12-month period following the
expiration or termination of this Agreement. All investors introduced
by HCM or its designee during the Term shall be set forth on Schedule A annexed
hereto and made a part hereof. Subsequent to the date of this
Agreement and immediately upon the introduction of an Investor to the Company,
HCM shall amend Schedule A to include each additional Investor and deliver such
amended Schedule A to the Company within ten (10) days of such
introduction.
5. Compliance
With Applicable Law. In the execution of this Agreement, both
the Company and HCM each agrees to comply in all material respects with
applicable provisions of the Securities Act of 1933 (“Act”) and any regulations
thereunder and any applicable state laws and requirements.
The Company acknowledges and agrees
that HCM has been retained solely to provide the advice or services set forth in
this Agreement. HCM is not licensed as a broker-dealer or investment advisor
under applicable federal or state securities laws, and both HCM and the Company
acknowledges and agree that the advisory services to be performed hereunder
shall not include any activity for which HCM would be required to be licensed as
a broker-dealer or investment advisor. To the extent that HCM’s
activities do require such licenses, the Company shall not be obligated to pay
any amounts or issue any securities to HCM. The Company further
acknowledges that HCM is not being retained to provide or render any formal
opinion to the Company or its shareholders on the appropriateness or fairness of
any transaction.
6. Indemnification. The
Company agrees to indemnify HCM 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. Notwithstanding any
provision of this engagement letter to the contrary, the Company agrees that
neither HCM nor its affiliates, and the respective officers,
directors, employees, representatives and each other person, if any, controlling
HCM or any of its affiliates, shall have any liability (whether
direct or indirect, in contract or tort or otherwise) to the Company for or in
connection with the engagement and transaction described herein except for
liability imposed by applicable law in connection with their actions/omissions
as representative for the transaction(s).
7. Termination;
Survival of Provisions. This Agreement may be terminated by
HCM, or the Company at any time upon ninety (90) days prior written notice to
the other party (the “Termination Date”); provided, however, that: (a)
any termination or completion of HCM ’s engagement hereunder shall not affect
the Company’s obligation to indemnify HCM as provided in the
Indemnification Provisions and (b) any termination by HCM and the Company’s
engagement hereunder shall not affect the Company’s obligation to pay fees as
provided for in Section 3 herein; and (c) any termination by the Company of
HCM’s engagement hereunder shall not affect the Company’s obligation to pay fees
and reimburse the expenses accruing prior to such termination to the extent
provided for herein. All such fees and reimbursements due shall be
paid to HCM 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 Transaction(s) or any applicable portion thereof (in the event
such fees are due pursuant to the terms of Section 3 hereof). The
provisions of Sections 1,3,4,6 and 10 shall survive any termination of this
Agreement.
8. Information. In
connection with HCM’s activities hereunder, the Company will furnish or use its
best efforts to cause the Company to furnish HCM with all materials and
information regarding the business and financial condition of the Company
necessary to provide the services described herein (the “Information”). The Company
acknowledges and agrees that HCM shall rely upon such Information in providing
the services and advice required hereunder, and that such services and advice
are nessarily limited by the accuracy and completeness of the Information
provided to HCM.
9. Entire
Agreement; Amendments; Headings. This Agreement, including the
exhibits hereto, constitutes the entire understanding of the parties with
respect to the subject matter hereof and supersedes any prior oral or written
agreements or understandings of the parties. This Agreement may not
be modified or amended except in writing duly executed by the parties
hereto. The section headings in this Agreement have been inserted as
a matter of convenience of reference and are not part of this
Agreement.
10. Nondisclosure
of Confidential Information. HCM and the Company mutually
agree that they will not disclose any confidential information received from the
other party to others except with the written permission of the other party or
as such disclosure may be required by law. HCM has been retained
under this Agreement as an independent contractor with duties owed solely to the
Company. The advice, written or oral, rendered by HCM pursuant to
this Agreement is intended solely for the benefit and use of the Company in
considering the matters to which this Agreement relates, and the Company agrees
that such advice may not be relied upon by any other person, used for any other
purpose, reproduced, disseminated, or referred to at any time, in any manner or
for any purpose, nor shall any public references to HCM be made by the Company,
without the prior written consent of HCM, which consent shall not be
unreasonably withheld.
11. Successors
and Assigns. The benefits of this Agreement shall inure to the
parities 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 HCM nor the Company shall
assign to an unaffiliated third party any of its obligations
hereunder.
12. Press
Announcements. The Company agrees that HCM 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 HCM shall submit a copy of any such
advertisement to the Company for its approval, such approval not to be
unreasonably withheld.
13. Counterparts. For
the convenience of the parties, this Agreement may be executed in any number of
counterparts, each of which shall be, and shall be deemed to be, an original
instrument, but all of which taken together shall constitute one and the same
Agreement. Such counterparts may be delivered by one party to the
other by facsimile or other electronic transmission, and such counterparts shall
be valid for all purposes.
If the
terms of our engagement as set forth in this letter are satisfactory to you,
please sign and date the enclosed copy of this letter and submit it back to
us.
The
Company’s signature below shall constitute its agreement to the terms
hereof.
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Very
truly yours,
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Harborview
Capital Management, LLC
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By:
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Xxxxxxx
Xxxxxxxxx
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Principal
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ACCEPTED AND AGREED TO:
as of the date first written above:
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By:
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Xxxxxxxx
Xxxxxx
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Chief
Executive Officer
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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 HCM 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, HCM’s acceptance of or the performance or non-performance of its
obligations under the Agreement between the Company and
HCM (including without limitation HCM or its designees as the
Company’s observer on the board of directors of the Company) 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 HCM 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
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 HCM 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 negligence or willful misconduct.
These
Indemnification Provisions shall extend to the following persons (collectively,
the “Indemnified
Parties”): HCM, its present and former affiliated entities,
managers, members, officers, employees, legal counsel, representatives and
controlling persons (within the meaning of the federal securities laws), and the
officers, directors, partners, stockholders, members, managers, employees, legal
counsel, representatives 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.
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, except insofar as the Company shall have
been materially prejudiced by such delay. 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 the Company
counsel. The Indemnified Parties shall cooperate with the Company in
any defense, except such matters in respect of which the Indemnified Parties
counsel shall advise the Indemnified Parties that such cooperation would impair
a defense available to the Indemnified Parties that is unavailable to 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
HCM, 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 HCM 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 HCM 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 for a
period of two years after such termination or completion. 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.
SCHEDULE
A
Investors
