June 10, 2010
EXHIBIT
4.13
June 10,
0000
Xxxxxxxxx
Xxxxxx Inc.
0 Xxxx
Xxxxxx Xxxx, Xxxxx 0000
Xxxxxxx,
Xxxxxxx X0X0X0
Xxxxxx
Dear Xx.
Xxxxxxx,
The
purpose of this letter agreement (the “Agreement”) is to confirm the engagement
of Xxx Xxxx Securities, LLC (“GW”), a FINRA member firm, by EAGLEFORD ENERGY INC. (the
“Company”), on a selective basis to render financial advisory services to the
Company in order to expand institutional awareness in the financial
community.
Section
1. Engagement Term. GW shall conduct institutional investor
services for a period of two years commencing on the date hereof and expiring
June 10, 2012. During this period GW shall initiate a platform of
services aimed at introducing Eagleford Energy Inc. to institutional investors
in order to build corporate visibility. The services shall include but are not
limited to investor introductions via telephone calls, investor meetings and
conference invitations. GW agrees to perform its obligations
hereunder in a professional manner and in accordance with applicable industry
standards of conduct. In doing so it shall exercise due care and
diligence and shall conduct all activities on the Company’s behalf consistent
with just and equitable principles of trade.
Notwithstanding
the foregoing, and subject to the provisions of Section 5 hereof, either party
may terminate this Agreement upon giving 15 days prior written notice to the
other party. In the event of termination by the Company, GW and affiliated
persons shall retain all fees, including Warrants, paid to them by the Company
through the date of termination and shall be entitled to additional fees in the
form of Success Fees (as defined below), if applicable, in connection with
services performed by GW and affiliated persons through the date of termination.
GW and affiliated persons shall not however, under such circumstances, be
entitled to receive Warrants for periods commencing after the termination
date. In the event of termination by GW, GW and affiliated persons
shall be entitled to retain all Success Fees paid to them through the date of
termination and shall be entitled to additional Success Fees, if applicable, in
connection with services performed by GW and affiliated persons through the date
of termination. Under such circumstances however, GW and affiliated persons will
only be entitled to retain Warrants issued to them within 6 months of the
termination date to the extent earned and will not be entitled to receive
additional Warrants for periods commencing after the termination date. By way of
example, if Warrants are issued to GW and affiliated persons on December 10,
2010 and GW terminates this Agreement effective December 31, 2010, GW and
affiliated persons will have earned 1/3 of the Warrants issued to them on
December 10, 2010 and will be required to return 2/3 of the Warrants issued to
them on December 10, 2010. In the foregoing example, Warrants issued by the
Company to GW and affiliated persons on June 10, 2010 and fully earned by GW by
December 10, 2010, will not be affected.
Section
2. Fees. A fee consisting of an aggregate of one million five
hundred thousand (1,500,000) warrants to purchase EAGLEFORD ENERGY INC., common
stock as follows: The first 1,000,000 Warrants shall have a US$1.00 strike price
expiring on December 10, 2011 and shall be issued by the Company to GW in three
equal tranches on each of June 10, 2010, December 10, 2010 and June 10, 2011.
The remaining 500,000 Warrants shall have a US$1.50 strike price expiring on
June 10, 2012 and shall be issued by the Company to GW in three equal tranches
on each of June 10, 2010, December 10, 2010 and June 10, 2011 (the “Warrants”).
The shares represented by the Warrants shall have piggyback registration
rights. The Warrants shall be issued as follows:
1
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-Xxx
Xxxx Securities, LLC:
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100,000
warrants with a strike price of $1.00 and
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50,000
warrants with a strike price of $1.50
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(shall
be assignable in part or in whole to officers or employees of Xxx Xxxx
Securities, LLC.) (1)
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-Xxxxxxx
X. Xxxxxx:
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300,000
warrants with a strike price of $1.00 and
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150,000
warrants with a strike price of $1.50 (1)
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-Xxxxxxxxx
X. Xxxxxxxxxx:
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300,000
warrants with a strike price of $1.00 and
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150,000
warrants with a strike price of $1.50 (1)
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-Xxxxxxx
X. Xxxxxxxxxx:
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300,000
warrants with a strike price of $1.00 and
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150,000
warrants with a strike price of $1.50 (1)
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(1) 1/3
of these warrants shall be issued on each of June 10, 2010, December 10, 2010
and June 10, 2011.
In the
event a private placement of Company securities should result through direct GW
introductions, a success fee (the “Success Fee”) to GW consisting of a cash fee
equal to 6.0% of the aggregate gross proceeds from the sale of such Company
securities to investors received by the Company shall be paid. The
Success Fee shall be paid to GW, as applicable, on the relevant closing date or
as soon as reasonably practicable thereafter.
The
Success Fee shall be payable with respect to any private placement
occurring:
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(i)
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during
the term of this Agreement; or
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(ii)
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after
the term of this Agreement, if GW introduced the purchaser of the private
placement or an affiliate of purchaser to the Company within 3 months
preceding the closing of the private
placement.
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Section
3. Right of First Refusal. Upon closing of a private placement
or series of private placements by GW on or before September 30, 2010 exceeding
$5.0 million, Eagleford Energy Inc. will immediately xxxxx XX a right of first
refusal on a non-exclusive basis to act as the Company’s Investment
Banker/Financial Advisor on any financings in the next twelve
months.
Section
4. Confidentiality. The Company acknowledges that all advice
(written or oral) which may be given by GW to the Company in connection with
GW’s engagement (the “GW Information”) is intended solely for the benefit and
use of the Company (including its management, directors and attorneys), and the
Company agrees that no such advice shall be used, reproduced, disseminated,
quoted or referred to at any time, in any manner or for any purpose, nor shall
any public references to GW be made by the Company (or such persons), without
the prior written consent of GW, which consent shall not be unreasonably
withheld. In the event the Company is required under law or regulatory
compliance to make disclosure of any of the GW Information, the Company will
give notice to GW prior to such disclosure, to the extent the Company can
practically do so.
GW
acknowledges that the Company may give confidential information to GW (the
“Company Information”). GW will maintain the confidentiality of the Company
Information and, unless and until such Company Information shall have been made
publicly available by the Company or by others without breach of a
confidentiality agreement, GW shall disclose the Company Information only as
authorized by the Company or as required by law or by order of a governmental
authority or court of competent jurisdiction. In the event GW is legally
required to make disclosure of any of the Company Information, GW will give
notice to the Company prior to such disclosure, to the extent the GW can
practically do so.
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The
foregoing paragraph shall not apply to Company Information that:
at the
time of disclosure by the Company, is or thereafter becomes, generally available
to the public or within the industries in which the Company or GW or its
affiliates conduct business, other than as a direct result of a breach by GW of
its obligations under this Agreement;
prior to
or at the time of disclosure by the Company, was already in the possession of,
or conceived by, GW or any of its affiliates, or could have been developed by
them from information then in their possession, by the application of other
information or techniques in their possession, generally available to the
public, or available to GW or its affiliates other than from the Company; at the
time of disclosure by the Company thereafter, is obtained by GW or any of its
affiliates from a third party who GW reasonably believes to be in possession of
the Company Information not in violation of any contractual, legal or fiduciary
obligation to the Company with respect to that Company Information; or is
independently developed by GW or its affiliates.”]
Section
5. Key Person Recognition. The parties acknowledge and agree
that the participation of Xxxxxxx X. Xxxxxx, Xxxxxxxxx X. Xxxxxxxxxx and Xxxxxxx
X. Xxxxxxxxxx, in their capacities as employees of GW, is essential to this
Agreement. Accordingly, if any of them shall leave the employ of GW
during the term of this Agreement (an “Employee Departure”), GW shall notify the
Company, in writing (the “Key Man Notice”), within 3 business days thereof, and
within 20 days thereafter the Company shall have the following
rights:
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(i)
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The
Company may, by written notice to GW, terminate this Agreement, which
termination shall be given retroactive effect to the date of the
Employee’s Departure and shall be treated in the same manner as a
termination by GW under Section 1 hereof. Accordingly, Warrants not earned
at the date of Employee Departure shall be returned to the Company and the
Company shall have no further obligation to issue additional Warrants;
or
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(ii)
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The
Company may, by written notice to GW, agree to continue this Agreement
with full force and effect except that the Company will have no further
obligation to issue Warrants to the departed GW employee and the Warrant
allocation to GW, with respect to issuances subsequent to the Employee
Departure date shall be proportionately reduced with a 1/3rd
reduction for each Employee Departure. Further, the Warrants
issued to GW and the departing employee as of the date of Employee
Departure shall be subject to proportionate return in the manner provided
for unearned warrants set forth in Section 1 hereof. In lieu of
the foregoing, the Company may agree to continue its relationship with
both GW and the departed GW employee under the terms of this Agreement and
issue to such departed GW employee, Warrants on the same basis it was
obligated to issue them to such departed employee under this Agreement,
had the departure never taken place. Under such circumstance, neither the
departing employee or GW shall be required to return any previously issued
Warrants; or
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(iii)
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The
Company may, by written notice to GW, agree to GW’s replacement of the
departed GW employee by another GW employee (the “Replacement Employee”)
who will, on a going forward basis, stand in the shoes of the departed
employee with respect to future entitlement to Warrants. The departing GW
employee shall be required to transfer all unearned Class A Warrants and
Class B Warrants to the Replacement Employee. Under this
option, GW and the remaining GW employees shall retain the same rights
with respect to past and future issuances of Warrants as they had prior to
the Employee Departure.
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Section
6. Arbitration.
Any dispute, claim or controversy arising out of or relating to this Agreement
or the breach, termination, enforcement, interpretation or validity thereof,
including the determination of the scope or applicability of this agreement to
arbitrate, shall be determined by arbitration in Chicago, Illinois before one
arbitrator mutually agreed to by the parties hereto. The parties hereby
waive all right to trial by jury with respect to the foregoing. The
arbitration shall be conducted in accordance with the dispute resolution
procedures of the American Bar Association. Judgment on the award may be
entered in any court having jurisdiction. The arbitrator may, in his or
her sole discretion, allocate all or part of the costs of the arbitration in the
award, including the fees of the arbitrator and the reasonable attorneys’ fees
of the parties. The arbitrator shall not have the power to award punitive
damages.
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Section
7. Indemnity. GW and the Company have entered into
a separate letter agreement, dated the date hereof, with respect to the
indemnification of GW by the Company with regard to GW’s engagement
hereunder.
Section
8.
Miscellaneous. This
Agreement constitutes the entire understanding and agreement of the parties with
respect to the subject matter hereof (except for the letter agreement referenced
in Section 7 above, which is incorporated herein and made a part hereof by
reference). This Agreement may not be amended except by a written
instrument signed by both parties hereto. This Agreement shall be governed
by and construed in accordance with the laws of the State of Illinois, without
regard to conflict of law rules.
Please
confirm that the foregoing is in accordance with your understandings and
agreements with GW by signing and returning to GW the duplicate of this
letter.
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Very
truly yours,
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Xxx
Xxxx Securities, LLC
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/s/
Xxxxxx X. Xxxxxxx,
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Chief
Operations Officer
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ACCEPTED
AND AGREED AS OF
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THE
DATE FIRST WRITTEN ABOVE:
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By:
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/s/ Xxxxx Xxxxxxx
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Name:
Xxxxx Xxxxxxx
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Title:
Director
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