Investment Banking Agreement
This
Investment Banking Agreement (the "Agreement") is made and entered into as of
December 17, 2007, and is to commence on January 1, 2008 by and among, Capital
City Petroleum, Inc (the "Company") having its place of business at 0000 Xxxxx
Xxxx Xxxxxx, Xxxxx 000, Xxxxxxxx, Xxxx 00000; and Capital City Consulting Group,
LLC, ("CCCG") having its place of business at 0000 Xx. Xxxxxxxx Xxxxxxxxx, Xxxxx
0000, Xxxxx, Xxxxxxx 00000.
Engagement of
Services
The
Company hereby retains CCCG, for the purpose of providing to the Company
Consulting and Investment Banking services, specifically with the mandate
to:
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A)
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Assist
the Company in developing a business plan, financial model and
capitalization plan,
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B)
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Lead
the merger and acquisition efforts on behalf of the
Company,
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C)
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Assist
the Company in "going public" through a reverse
merger,
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D)
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Lead
the institutional/strategic financing of growth capital for the Company,
and
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E)
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Create
an exit strategy for the Company's investors through a liquidity event
and/or the strategic sale of part or all of the
Company.
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CCCG
agrees to be retained to provide such services described in Section One below on
an exclusive basis pursuant to the terms and conditions set forth
herein.
Section One: Statement of
Work
CCCG
will, on behalf of the Company, perform the following Investment Banking and
Advisory Services:
(a) CCCG
shall be available for advice, and shall advise the Company with respect to such
financial matters relating to: capital raising, whether from institutional and
other investors or lenders or from the private placement of debt instruments or
equity securities; public offerings of debt or equity; structure of debt or
equity financings; acquisitions and other business ventures; stockholder and
securities dealer relations;
(b) CCCG
will become educated in the business of the Company, with an emphasis on the
Company's business model, corporate structure and equity ownership. CCCG will be
available to perform advisory services including; general business and financial
analysis, corporate strategy development, transactional feasibility analysis,
and to assist the Company in the preparation of any descriptive materials to be
issued by the Company.
(c) CCCG
will act as investment banker in executing the approved business plan. In this
capacity, CCCG will identify potential investors, strategic partners and or
acquisition or merger candidates. CCCG will contact these firms and investors,
on behalf of the Company, and will qualify them as appropriate partners. CCCG
will assist the Company in structuring and negotiating the transactions. The
Company agrees not to solicit any of CCCG's strategic partner introductions for
capital, without the appropriate written approval by CCCG.
For the
duration of this Agreement, on an exclusive basis, CCCG will have the ability to
engage in substantive discussions with potential investors, acquirers, merger or
acquisition candidates, strategic partners and/or joint venture partners on
behalf of the Company. CCCG will provide the Company with the names of parties
to whom it intends to disclose proprietary information, which will be required
to enter into a Confidentiality Agreement with the Company and CCCG prior to
receiving any proprietary or confidential information of the Company. In
performing its services herein, CCCG shall be entitled to rely without
investigation upon all information that is provided by the Company, which
information the Company hereby warrants that to the best of its knowledge and
information shall be complete and accurate in all material respects, and not
misleading. CCCG in no way guarantees that the Company will successfully raise
capital.
Section Two: Work
Responsibilities
It is
understood that CCCG's services will be rendered both on and off-site of the
Company. Subject to CCCG providing reasonable prior notice, the Company agrees
to provide an office, secretarial support, and time of key employees while CCCG
is on-site performing the services described in Section One.
Section Three:
Duration
The
duration of this Agreement (the "Term") shall extend for a period of twenty-four
(24) months from the execution date first written above, and/or signed. The
Company may extend the term of this agreement for two (2) additional six (6)
month increments.
Section Four:
Payment
The
Company will pay a non-refundable initial retainer of Twenty-Thousand Dollars
($20,000) with the signing of this agreement, and agrees to pay monthly
consulting fees of Ten-Thousand Dollars ($10,000) for services to be performed
by CCCG, commencing February 1, 2008. The Company agrees to increase the monthly
consulting fees to a minimum of Twenty-Thousand Dollars ($20,000) per month when
it is established that CCCG is devoting in excess of Fifty (50%) Percent of its
time and capacity on behalf of the Company, and/or CCCG is the investment banker
on a merger and acquisition assignment that has been approved by the Company and
is at the Letter of Intent ("LO!") stage. The monthly consulting fees shall be
due and payable every thirty (30) day period that this agreement is in full
force. The monthly consulting fees will be credited against future success fees
earned by CCCG, that individually or collectively exceed twice the amount of the
total consulting fees collected to date.
Upon the
execution by the Company and CCCG of any of the following mandates: A) Lead the
merger and acquisition efforts on behalf of the Company, B) Assist the Company
in "going public" through a reverse merger, C) Lead the institutional/strategic
financing of growth capital for the Company, and D) Create an exit strategy for
the Company's investors through a liquidity event and/or the strategic sale of
part or all of the Company, the Company will grant CCCG a warrant under the
terms and conditions as outlined in Section Five: Additional Transactions
related to the Payment of Fees and Warrants section.
Section Five: Additional
Transactions
For
purposes of this Agreement, Additional Transaction(s) shall mean any additional
"Debt Financing", "Subordinated Debt Financing", "Private Placement, Capital
Infusion, Equity Investment or Financing" or a "Purchase, Merger or Sale
Transaction", which may occur during this engagement, or within eighteen (18)
months after the termination or expiration of this agreement. These additional
transaction(s) are for default purposes only. It is anticipated that any
additional transactional fees will be negotiated separately with the company, to
reflect any unique circumstances that may exist. CCCG will utilize one of its
broker-dealer relationships in order to be engaged, and to receive any potential
success fees above and beyond the consulting and advisory services contemplated
herein.
Debt
Financings For the purpose of this Agreement, a "Debt Financing" shall
include any transaction (or series of transactions) which directly or indirectly
results in: (i) senior and working capital lines, or other similar borrowings of
the Company nonnally undertaken by businesses in the course of operations which
includes capital received in consideration for notes, bonds, equipment leasing
transactions, or debentures not expressly defined as "junior" or "subordinated"
(discussed below), (ii) a combination of any such debt described above together
with the issuance and warrants/options, or (iii) convertible "debt, as described
above, to equity" securities. In the case of a "Debt Financing" where the source
of debt financing, excluding subordinated debt financing, closes during the Term
of this Agreement, or within eighteen (18) months after the termination or
expiration of this agreement, ccca or its broker-dealer nominee shall receive
upon closing of the transaction, a lump-sum fee computed by taking the total
amount of the Debt Financing multiplied by two (2%) percent.
Subordinated
Debt Financings For the purpose of this Agreement, a "Subordinated Debt
Financing" shall mean any transaction (or series of transactions) which directly
or indirectly results in the Company receiving proceeds from any debt financing
junior or subordinated to other debt, I.e., repayable in the case of liquidation
only after senior debt with a higher claim and priority has been satisfied. This
type of debt may be but not necessarily characterized by such features as
interest only payments for a specified period of time, equity participation
through warrants/options and other instruments, and convertible features. In the
case of a "Subordinated Debt Financing" where the source of subordinated debt
financing closes during the Tenn of this Agreement, or within eighteen (18)
months after the termination or expiration of this agreement, CCCG or its
broker-dealer nominee shall receive upon closing of the transaction, a lump-sum
fee computed by taking the total amount of the Subordinated Debt Financing
multiplied by four (5%) percent.
Equity
Raise For the Purpose of this Agreement, a "Private Placement, Equity
Capital Infusion, or any Equity Investment or Financing" which directly or
indirectly results in the transaction closing during the Term of this Agreement,
or within eighteen (18) months after the termination or expiration of this
agreement, CCCG or its broker-dealer nominee shall receive upon closing of the
transaction, a lump-sum consulting fee computed by taking the total gross
proceeds from the Private Placement, Equity Capital Infusion, or any Equity
Investment or Financing multiplied by ten (10%) percent. If the Equity component
is in the form of a Private Placement Memorandum (PPM), CCCG or its
broker-dealer nominee shall receive upon closing of the transaction, a lump-sum
fee computed by taking the total gross proceeds from the Private Placement
multiplied by ten (10%) percent, plus a non· accountable expense allowance of
three (3%) percent multiplied by the total gross proceeds from the Private
Placement.
Purchase,
Merger or Sale Transaction If an Purchase, Merger or Sale Transaction is
consummated by the Company during the Term of this Agreement, or a period of
eighteen (18) months after the termination or expiration of this Agreement, CCCG
or its broker-dealer nominee shall receive upon closing of the transaction a fee
computed by taking the Total Consideration received multiplied by a percentage
determined pursuant to the following schedule, assuming the minimum fee will be
One Hundred Thousand dollars ($100,000) per transaction:
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Total
Consideration
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Fee
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$0
to $1,999,999
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6.0%
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$2,000,000
to $3,999,999
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5.0%
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$4,000,000
to $5,999,999
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4.0%
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$6,000,000
to $7,999,999
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3.0%
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$8,000,000
or greater
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2.0%
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Purchase,
Merger or Sale Transaction (or series of transactions) which directly or
indirectly results in (i) the acquisition by the Company of all or any part of
the existing capital stock of such third party or all or any part of the assets
of such third party (or any securities convertible into or exchangeable for or
other rights to acquire all or any part of such capital stock or assets), or
(ii) the acquisition by such third pal1y of all or any part of the existing
capital stock of the Company or all or any part of the assets of the Company
(including any securities convertible into or exchangeable for or other rights
to acquire all or any part of such capital stock or assets), including in each
such case, without limitation, any sale or exchange of capital stock or assets
(including cash and other liquid assets), any merger or consolidation (including
any such transaction in which the third party is the surviving entity) or any
similar transaction outside of the ordinary course of the Company's
business.
For the
purposes of this Agreement with respect to a Purchase, Merger or Sale
Transaction, Total Consideration shall mean and be computed as the total sale
proceeds and other consideration received by Company, its stockholders, directed
beneficiaries, or any newly formed entity owned or participated in by Company
("New Company") an including, but not limited to: cash, securities, notes,
debentures, agreements not-to-compete, including contingent and installment
payments; consideration for assets owned by subsidiaries or entities controlled
by the Company; the total value of liabilities specifically assumed by the
acquirer; and any other tangible net benefit to the Company, its shareholders or
directed beneficiaries all as valued and set forth in the transaction documents,
unless otherwise agreed in writing.
Payment
of Fees and Warrants All fees due to CCCG or its broker-dealer nominee
pursuant to this Agreement are payable in cash. All fees are payable to CCCG at
the closing date of the subject transaction. To the extent amounts are payable
to Company after the closing date of a transaction, the Company shall pay CCCG
or its broker-dealer nominee the applicable fee associated with such amounts at
the time such amounts are actually received by Company. Any fees due and not
paid when due will accrue interest at the rate of six percent (6.0%) annually,
and the Company will be responsible for reasonable legal expenses, including
without limitation appellate expenses (at both the trial and appellate level)
incurred by the other in disputing such fees.
In
addition, upon closing of a Transaction(s), including Debt Financing(s),
Subordinated Debt Financing(s), Private Placement, Capital Infusion, Equity
Investment, Financing or Purchase, Merger or Sale Transaction(s) CCCG is
entitled to a fee as described herein above, the Company or any successor entity
will grant to CCCG a warrant to purchase the common stock of Company (the
"Warrant"), at a purchase price per share (the "Purchase Price") equal to the
higher of a) if a public company, the average trailing 30 day closing bid price
of the Company's stock as calculated for the period ending on the day
immediately prior to the closing date of such Transaction(s), or b) the price
per share paid by investors in such Transaction(s), or (c) the lesser of the
most recent transaction price per share paid by investors or an independent,
third-party valuation. The formula for determining the amount of warrants to be
issued, convertible into voting common shares, shall be calculated by taking the
success fee paid to CCCG in such Transaction and dividing it by the Purchase
Price, as described above. Warrants shall be issued at the closing of the
Transaction, and can be exercised at any time by CCCG in whole or part over five
(5) years. The Company or its successor entity agrees to reserve sufficient
amount of common shares to cover the exercise of the Warrant. Company shall
grant CCCG standard piggyback registration rights for any common stock issued to
CCCG by the Company and any common stock underlying the Warrants. The Company
also agrees to grant CCCG a cashless exercise feature on the aforementioned
success warrants.
The
Company will reimburse CCCG for all pre-approved business expenses ("Expenses")
incurred by CCCG in the performance of the work as described in this Agreement,
to include all reasonable travel expenses for Company approved meetings, not to
exceed One-thousand ($1,000) dollars per month. Expenses will be billed and paid
on a monthly basis, beginning on the first of each month beginning with the
first calendar month following the date of this Agreement.
Section Six: Status of CCCG;
Indemnification
CCCG is
and shall be an independent contractor and is not and shall not be deemed or
construed to be an employee of the Company by virtue of this Agreement. Neither
CCCG, nor the Company shall hold CCCG out as an agent, partner, officer,
director, or other employee of the Company in connection with this Agreement or
the performance of any of the duties, obligations or performances contemplated
hereby and CCCG further specifically disclaims any and all rights to an equity
interest in or a partnership with the Company by virtue of this Agreement or any
of the transactions contemplated hereby, except as specifically provided herein.
CCCG specifically acknowledges and agrees that it shall have no authority to
execute any contracts or agreements on behalf of the Company or any other person
that, directly or indirectly, through one or more intermediaries, controls, is
controlled by or is under common control with the Company (an "Affiliate") and
it shall have no authority to bind the Company or its Affiliates to any
obligation (contractual or otherwise). For purposes of this Agreement, (a) the
term "control" shall mean the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of a person,
whether through the ownership of voting interests, by contract or otherwise and
(b) the term "person" shall mean an individual, partnership, corporation,
limited liability company, limited liability partnership, trust, joint venture
or other entity.
In the
event that CCCG becomes involved in any capacity in any action, proceeding or
investigation in connection with any matter referred to in this Agreement not
resulting from or relating to CCCG's recklessness, negligence, bad faith or
intentional wrongful acts, the Company will reimburse CCCG for reasonable legal
and other expenses as such expenses are incurred in connection therewith. The
Company will also indemnify and hold harmless CCCG against losses, claims,
damages or liabilities to which CCCG may become subject in connection with any
matter referred to in this Agreement, except to the
extent
that any such loss, claim, damage or liability results from the recklessness,
negligence, bad faith or intentional wrongful acts of CCCG performing the
services that are the subject of this Agreement. The provisions of this Section
7 shall survive any termination or expiration of this Agreement for a period of
twenty-four (24) months.
Section Seven: Governing
Law
The laws
of the State of Ohio shall govern this Agreement. Any controversy or claim
arising out of, or relating to, this Agreement, to the making, performance, or
interpretation of it, shall be settled by arbitration in Columbus, Ohio unless
otherwise mutually agreed upon by the parties, under the commercial arbitration
rules of the American Arbitration Association then existing, and any judgment on
the arbitration award may be entered in any court having jurisdiction over the
subject matter of the controversy. If any legal action or any arbitration or
other proceeding is brought for the enforcement of this Agreement, or because of
an alleged dispute, breach, default, or misrepresentation in connection with any
of the provisions of this Agreement, the successful or prevailing party or
parties shall be entitled to recover reasonable attorney's fees and other costs
incurred in that action or proceeding, in addition to any other relief to which
it or they may be entitled. The Governing Law provisions shall survive any
termination of this Agreement.
Section Eight:
Integration
This
Agreement contains the entire Agreement among the parties and supersedes all
prior oral and written agreements, understandings, and representations among the
parties. No amendments to this Agreement shall be binding unless executed in
writing by all the parties.
Section Nine:
Confidentiality
Except as
otherwise required by law, the terms of this Agreement shall not be disclosed by
CCCG to any third party, with the exception of potential investors as part of
their due diligence efforts, without the prior written consent of both parties
to this Agreement. CCCG shall keep confidential and not disclose any non-public
information provided to it by or on behalf of the Company or by any third-party,
in relation to any of the services provided or to be provided by it to the
Company, except that it may disclose any such information to its advisors (which
persons shall be bound by similar confidentiality obligations and for which CCCG
shall accept full responsibility in compliance with this Section) or as required
by law or with the prior consent of the Company. The restrictions in the
preceding sentence shall not apply to information that becomes publicly
available through no fault of CCCG or information that CCCG may be required by
law to disclose.
IN
WITNESS WHEREOF, the parties to this Agreement have duly executed it on the day
and year first above written.
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Capital
City Consulting Group, LLC
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Capital
City Petroleum, Inc.
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/s/ Xxxxxx X.
Xxxxx
Xxxxxx
X. Xxxxx
Managing
Director
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s/ Xxxxxxx
Xxxxxxxx
Xxxxxxx
Xxxxxxxx
Chief
Executive Officer
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