Exhibit 10.25
[WestPark Capital, Inc. Logo]
INSTITUTIONAL PRIVATE PLACEMENT
ENGAGEMENT AGREEMENT
May 8, 2001
Mr. Xxxxx Xxxxxxxx, President & C.E.O.
Smart Chip Technologies, Inc.
000 Xxxx 0000 Xxxxx
Xxxx Xxxx Xxxx, XX 00000
Dear Xx. Xxxxxxxx:
This Private Placement Engagement Agreement (the "Agreement") shall serve to set
forth the terms and conditions by which WestPark Capital, Inc. ("WestPark") will
provide financial advisory and limited professional services to Smart Chip
Technologies, Inc. and its affiliates (the "Company"). WestPark will act as the
Company's Non-Exclusive Placement Agent, advise and assist it in a private
offering of its securities and/or a sale of a majority of the Company's assets
(the "Offering") on a "best efforts" basis pursuant to the terms and conditions
as set forth herein (the "Services").
1. Structure of Offering - The Offering shall be directed towards raising
from two to ten million dollars ($2,000,000 - $10,000,000) from either,
or a combination of a a) sale of the Company's common stock, b) sale of
a majority of the Company's assets, and/or c) merger of the Company
with another entity. The actual amount, structure and pricing of the
proposed Offering will be determined by the Company and WestPark, after
completion of an analysis of the business and market conditions for
such Offering.
2. Scope of Engagement - WestPark will advise the Company on the various
aspects of a sale of its securities, by means of a private placement,
and a sale of its assets. These Services will be under the direction of
the Company's management and legal advisors. Services will include 1)
identifying and contacting potential investors or buyers; 2) advising
the Company on various structuring options and alternatives of a
proposed Transaction (the "Transaction") for any parties WestPark may
introduce; and 3) assisting the Company with the negotiations of the
financial aspects of the Transaction entered into in connection with
any such party WestPark may introduce. In connection with the
foregoing, WestPark will work with the Company's management, providing
advice, input and review management's development of an appropriate
overall business plan suitable for distribution to potential investors
or buyers for the circumstances dictated by the Transaction
contemplated and described herein.
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0000 Xxxxxxxxx Xxxxx, 00xx Xxxxx - Xxxxxx, Xxxxxxxxxx 00000 -
Tel: 000.000.0000 - Fax: 000.000.0000
3. Term - The term of this Agreement shall be for a period of Two (2)
months from the date of execution hereof, thereafter on a
month-to-month basis which is cancelable by either party upon thirty
(30) days written notice, except however, if the Company has received a
letter of intent, this Agreement shall remain in full force and effect
through the completion of the Offering.
4. Company and WestPark Responsibilities - The Company represents and
warrants to WestPark that, to the best of its knowledge, any and all
information provided in connection with any transaction that may be
initiated under the terms and conditions of this agreement, in a form
including but not limited to a business plan, private placement
memorandum, correspondence and collateral material, whether it be to
anyone connected with the transaction or distributed to outside
parties, will not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading.
The Company agrees and acknowledges that any and all due diligence
conducted by WestPark is for the sole benefit and use by WestPark and
will not and can not be relied on by any other person or entity and all
prospective investors will conduct their own due diligence prior to
participating in the transaction.
WestPark agrees that the form and content of any written material to be
distributed by WestPark concerning the Company will be approved by the
management of the Company prior to distribution.
5. Fees - The Company will pay to WestPark, as consideration for the
Services described herein:
I. Cash
a. A non-refundable monthly retainer of ten thousand
dollars ($10,000) payable upon execution of this
Agreement.
b. A non-refundable monthly retainer of ten thousand
dollars ($10,000), in advance, due on or before the
1st day of each month.
c. Concurrent with each closing under the Transaction
(each such event a "Closing" and all such events
together the "Closings") WestPark will be compensated
as follows:
Transaction type Fee
---------------- ---
i) For all equity transactions Eight percent (8%)
of transaction value
ii) Subordinated debt Five percent (5%) of
debt placement
iii) Senior debt Two & one half
percent (2 1/2%) of
debt placement
iv) Credit enhancements One percent (1%)
v) Sale or merger of the Five percent (5%) of
Company of transaction value
vi) Revenue sources Five percent (5%) of
introduced the first three
years' collected
revenues including
royalties.
All fees pursuant to subsection c) of this section are subject to a
minimum fee equal to the greater of $100,000 or the total retainer
which WestPark has been paid and/or is entitled to, pursuant to
subsection a) and b) of this section. WestPark, in its sole discretion,
may purchase an equity interest in the company, under the same terms
and conditions set forth in the transaction, in an amount not to exceed
the total compensation earned by WestPark for the Services provided,
and;
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II. Warrants
Seven (7) year cashless exercise warrants (the "Warrants") for the
purchase of an equity interest of the Company equal to 10% of the
securities subject to the Transaction, including but not limited to
securities issued, issuable by conversion of a convertible instrument
and/or exercisable warrants. The exercise price shall be set to be the
same price paid by investors for the equity interest in the transaction
or the enterprise value of the Transaction if the Company is sold or
merged. The shares underlying the Warrants will have standard demand
registration and piggyback rights.
All consideration payable to WestPark pursuant to the terms and
conditions of this Agreement, are due and payable on or before its
respective due date. WestPark, as an accommodation may present the
Company with an invoice for such amounts due, however payment is not
subject to the receipt of an invoice. This Agreement shall serve as the
Company's documentation for payment processing and remittances.
All forms of compensation set forth in this section are payable to
WestPark with respect to any completed transaction by and between the
Company and any person or entity and their affiliates having previously
met with, spoken to and/or introduced by WestPark for the period from
the execution date of this Agreement through the end of the 24th month
following the termination date of this agreement, after giving effect
to any and all extensions to this Agreement.
6. Expenses - The Company is responsible for all costs related to this
Offering, which may include but is not limited to the preparation and
production of Company material, legal fees, printing and reproduction
costs, communication and conference calls, accounting and other
professional services, Blue Sky registration fees, road show and travel
related expenses, and miscellaneous out-of-pocket expenses incurred in
connection with this engagement. The Company will be required to pay
for all expenses in advance by either providing for direct billing to
the Company or Company's credit card. Any expenses incurred by WestPark
on behalf of the Company, related to this engagement will be invoiced
and due upon receipt.
7. Late Fees and Finance Charges - All fees and expenses not received by
WestPark by the respective due date are subject to a late fee and
interest will be charged at the rate of 1.5% per month on all
outstanding balances. In the event that an account becomes delinquent,
WestPark employs the same prudent collection procedures as other
businesses and if it becomes necessary to file suit or to engage a
collection agency for the collection of any fees and/or costs, the
Company shall pay all related costs and expenses, including reasonable
attorneys' fees.
8. Representations and Warranties - The Company represents and warrants to
WestPark that: the Company will not cause or knowingly permit any
action to be taken in connection with the Offering which violates the
Securities Act of 1933 or any state securities laws; the Company will
cooperate with WestPark so as to permit the Offering to be conducted in
a manner consistent with the applicable state and federal securities
laws; that all information and statements provided by the Company will
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be true and correct and will not be misleading or violate the
anti-fraud provisions of the Securities and Exchange Act of 1934;
current Company management, as disclosed to WestPark, will continue in
place after the Offering for a reasonable period of time; there will be
included in the financial statements of the Company for the last three
fiscal years or for such shorter period as the Company was in existence
and the latest unaudited (comparative, should it be necessary)
quarterly or other interim financial statements; the financial
statements will fairly reflect the financial condition of the Company
and the results of its operations at a time and for the period covered
by such financial statements, and such statements will be substantially
as heretofore represented to WestPark; the Company does not know of any
undisclosed facts having a material adverse affect; the Company will
prepare and deliver to WestPark its most recent estimates of sales,
earnings, and cash flow and agrees to update those estimates on a
monthly basis during the term of the Offering. The Company agrees to
indemnify and hold WestPark and its attorneys, accountants, agent and
employees, officers and directors, free and harmless from any
liability, cost and expenses, including attorneys' fees in the event of
a breach of this representation and warranty.
9. Indemnification - In consideration of the services to be provided by
WestPark under this Agreement, the Company shall:
Indemnify and hold harmless WestPark and any of its directors,
officers, employees, consultants or agents (each individually an
"Indemnified Person") from and against any losses, claims, damages or
liabilities to which such Indemnified Person may become subject arising
out of our in connection with the rendering of services by WestPark
hereunder, except to the extent that such losses, claims, damages or
liabilities are determined in judicial rulings to have primarily
resulted from the gross negligence or willful misconduct of such
Indemnified Person; and reimburse such Indemnified Person for
reasonable legal and other expenses as they are incurred, that arise in
connection with investigating, preparing to defense or defending any
lawsuit, claim or proceeding and any appeals therefrom arising in any
manner out of or in connection with the rendering of services by
WestPark, provided, however that in the event a final judicial decision
is made to the effect specified above, such Indemnified Person will
promptly remit to the Company any amounts reimbursed under the section.
The Company and WestPark agree that (i) the indemnification and
reimbursement commitments set forth above shall apply whether or not
such Indemnified Person is a named party to any such lawsuit, claim or
other proceeding; and (ii) promptly after receipt by WestPark of notice
of its involvement in any action, proceeding or investigation, shall
notify the Company in writing of such involvement. This indemnification
shall survive any termination of this Agreement.
10. Exclusive Nature - This Agreement is non-exclusive.
11. Confidentiality - WestPark understands and agrees that it will not
provide any information to any third party concerning the Company
unless said third party has executed a confidentiality agreement in a
form acceptable to the Company, or the Company has agreed in writing to
waive such requirements with respect to the third party, or the
information materials have received prior approval for distribution to
eligible parties.
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12. Successors - This Agreement is binding upon the parties hereto and
their respective permissible assigns, successors, heirs and personal
representatives, and shall inure to their benefit.
13. Assignment - Neither this Agreement nor any right pursuant thereto or
interest therein shall be assignable by any of the parties hereto
without the prior written consent of the other parties hereto, except
as expressly permitted herein.
14. Governing Law - This Agreement shall be governed and construed in
accordance with the laws of the State of California. The prevailing
party in any legal action brought under this Agreement shall be
entitled to immediately recover all legal fees and costs.
15. Costs and Attorneys' Fees - If any action, suit, arbitration proceeding
or other proceeding is instituted arising out of these Agreement, the
prevailing party shall recover all of such party's costs, including,
without limitation, the court costs and attorneys' fees incurred
therein, including any and all appeals or petitions therefrom. As used
herein, "attorneys' fees" shall mean the full and actual costs of any
legal services actually rendered in connection with the matters
involved, calculated on the basis of the usual fee charged by the
attorney performing such services.
16. Waiver and Amendment - No waiver, amendment or modification of any
provision of this Agreement shall be effective unless consented to by
both parties in writing. No failure of delay by either party in
exercising any rights, power or remedy under this Agreement shall
operate as a waiver of such right, power or remedy. Any terms and/or
conditions of this Agreement may be waived at any time, pursuant to
this section, but a waiver in one instance shall not be deemed to
constitute a waiver in any other instance.
17. Severability - In the event that any provision of this Agreement shall
be held to be invalid, illegal or unenforceable in any circumstances,
the remaining provisions shall nevertheless remain in full force and
effect and shall be construed as if the unenforceable portions were
deleted.
18. Section Headings; Defined Terms - Numbered and titled section headings
and defined terms are for convenience only and shall not be construed
as amplifying or limiting any of the provisions of this Agreement.
19. Entire Agreement - This Agreement and any exhibits herein incorporated
and attached hereto supersede all prior and contemporaneous
negotiations and agreements (whether written or oral) and constitute
the entire understanding among the parties.
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Please confirm that the foregoing correctly sets forth our Agreement by
returning one executed Agreement to our corporate office at 0000 Xxxxxxx Xxxx
Xxxx, Xxxxx 0000, Xxx Xxxxxxx, XX, 00000 and sending a facsimile to our Irvine
office at (000) 000-0000.
Very truly yours,
WESTPARK CAPITAL, INC.
By: /s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx,
Managing Director
Approved and agreed to this 9 day of May, 2001.
Smart Chip Technologies, Inc.
By: /s/ Xxxxx X. Xxxxxxxx
------------------------------------
Xxxxx Xxxxxxxx, President & C.E.O.
Tel. (000) 000-0000
(000) 000-0000
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