MAXIM GROUP January 20, 2005 Robert S. Rosenschein Chairman and CEO GuruNet Corporation Wesley Hills, NY 10952-1233 Dear Mr. Rosenschein:
MAXIM
GROUP
January
20, 2005
Xxxxxx X.
Xxxxxxxxxxx
Chairman
and CEO
GuruNet
Corporation
441 Route
306
Xxxxxx
Hills, NY 10952-1233
Dear Xx.
Xxxxxxxxxxx:
We are
pleased that GuruNet Corp. (“GuruNet” 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 (this
“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 non-exclusive 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 such capacity, Maxim shall: (i) familiarize itself to the
extent appropriate and feasible, with the business, operations, properties,
financial condition, management and prospects of the Company; (ii) act, at the
Company’s request, as an underwriter or a placement agent in a public offering
or a private placement, respectively, (iii) advise the Company on matters
relating to its capitalization; (iv) evaluate alternative financing structures
and arrangements; (v) assist the Company in developing appropriate acquisition
criteria and identifying target industries; (vi) provide such other financial
advisory and investment banking services upon which the parties may mutually
agree. For the avoidance of doubt, the statements contained in this Section 1
regarding the services are preliminary in nature and subject to change and
definitive documentation to be agreed upon the Company and Maxim.
2. Information. In
connection with Xxxxx’s activities hereunder, the Company will cooperate with
Xxxxx and furnish Maxim upon 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
Maxim deems 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 herein not misleading in light of
the circumstance 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
there 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 Xxxxx pursuant to this Agreement may not be
disclosed publicly without Xxxxx’s prior written consent nor may Maxim disclose
the same about the Company. 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 to any other companies in the industry in which the
Company is involved, either during or after the term of the
Agreement.
3. Compensation. As
consideration for Xxxxx’s services pursuant to this Agreement, Xxxxx shall be
entitled to receive, the Company agrees to pay Xxxxx, the following
compensation:
The
Company shall pay Maxim a non-refundable monthly retainer fee of $5,000
commencing on the signing of this Agreement and payable on the first day of cash
subsequent month for the duration of the Agreement (as detailed in Section 8 of
the Agreement). The fees appearing on the Fee Schedule (as defined below) shall
be earned by and paid to Maxim by the Company in connection with the services
provided by Xxxxx.
Upon the
signing of this Agreement, the Company shall deliver to Maxim (or its designated
nominees) 100,000 warrants to purchase shares of the Company’s common stock (the
“Warrants”). The Warrants shall be exercisable at any time during the five-year
period commencing on the date hereof at an exercise price equal to $11.00. The
Warrants shall contain provisions, including, without limitation, those
pertaining to cashless exercise, anti-dilution protection and one demand and two
piggyback registration rights (subject to underwriter’s crowdout), contained in
the Warrant certificated delivered to the Company together with this
Agreement.
The
Company and Maxim acknowledge and agree that, in the course of performing
services hereunder, Maxim may provide advisory services as described in Section
1 as well as merger and acquisition advisory services and introduce the Company
to the third parties who may be interested in entering into a transaction with
the Company, including, without limitation, a merger, acquisition or sale of
stock or assets (in which the Company may be the acquiring or the acquired
entity), joint venture, strategic alliance or other similar transaction (any
such transaction, the “Transaction”).
The
Company agrees to compensate Xxxxx for the services provided in conjunction with
the Transaction pursuant to the financing fee terms as listed on Exhibit B
hereto, the “Fee Schedule”:
| (i) |
If
the Company consummates the Transaction with the candidate initially in
writing by Xxxxx or following the request by the Company from M&A
services from Maxim, and for which Xxxxx is expressly engaged to act as
one of the Company’s investment bankers to investigate, structure,
negotiate and finance the Transaction, or |
| (ii) |
If,
during the term of this Agreement or within twelve 12 months from the
effective date of the termination of this Agreement, the Company
consummates a Transaction initially introduced in writing by Xxxxx, and
Xxxxx is not engaged as the Company’s financial advisor, agent and/or
investment banker in connection with such Transaction pursuant to Section
6 hereof. |
Such fees
shall be payable to Maxim in cash at the closing or closings of the Transaction
to which it relates, except as otherwise stated.
The
amount of consideration paid in a Transaction shall include, for purposes of
calculating such fee, all forms of consideration paid or received, directly or
indirectly, by the Company and/or its stockholders in such Transaction,
including, without limitation, cash, securities, notes or other evidences of
indebtedness, assumption of liabilities (whether by operation of law or
otherwise), or any combination thereof. If all or portion of the consideration
paid in the Transaction is other than cash or securities, then the value of such
non-cash consideration shall be the fair market value thereof on the date of the
Transaction is consummated as mutually agreed upon in good faith by the Company
and Maxim. If such non-cash consideration consists of common stock, options,
warrants or rights for which a public trading market existed prior to the
consummation for the Transaction, then the value of such securities shall be
determined based upon the closing or last sales price thereof on the date of the
consummation of the Transaction. If such non-cash consideration consists of
newly-issued, publicly-traded common stock, option, warrants or rights for which
no public trading market existed prior to the consummation of the Transaction,
then the value thereof shall be the average of the closing prices for the 30
trading days prior to the fifth trading day before the consummation of the
Transaction. In such event, the fee payable to Maxim pursuant to the Fee
Schedule shall be paid on the 35th trading
day subsequent to consummation of the Transaction. If no public market exists
for the common stock, options, warrants or other rights issued in the
Transaction, then the value thereof shall be as mutually agreed upon in good
faith by the Company and Maxim. If the non-cash consideration paid in the
Transaction consists of preferred stock or debt securities (regardless of
whether a public trading market existed for such preferred stock or debt
securities prior to consummation of the Transaction or exists thereafter), the
value thereof shall be the maximum liquidation value (without regard to accrued
dividends) of the preferred stock or the principal amount of the debt
securities, as the case may be.
Any
amounts payable by a purchaser to the Company, any stockholder of the Company or
an affiliate of either the Company or any stockholder of the Company in
connection with a non-competitive, employment, consulting, licensing, supply or
other agreement (payable by the Company if the Company is the acquiring entity)
shall be deemed to be part of the consideration paid in the Transaction. If all
or a portion of the consideration payable in connection with the Transaction
includes contingent future payments, then the Company shall pay to Maxim an
additional cash fee, determined in accordance with the Fee Schedule, as, when
and if such contingency payments are received. However, in the event of an
installment purchase at a fixed price and fixed time schedule, the Company
agrees to pay Maxim, upon consummation of the Transaction, an additional, cash
fee, determined in accordance with the Fee Schedule based upon the present value
of such installment payments using an annual discount rate of 10%. Xxxxx shall
be compensated with respect to any non-cash consideration in the same form of
the consideration. However, Xxxxx shall receive a minimum of $250,000 of any
such consideration in cash. If with respect to any non-cash consideration the
Company and Maxim are unable to agree on the fair market value thereof, then
such value shall be determined by submission of the question to a reputable
appraisal firm with experience valuing property of the nature of the subject
consideration acceptable to the Company and Maxim (the fees and expenses of whom
shall be borne equally by the Company and Maxim).
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 and
invoice and copies of receipts pursuant to its expenses and such expenses shall
not exceed $3,000 without prior written authorization of the
Company.
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 if this Agreement.
6. Future
Investment Banking Activities. Upon
successful completion by Xxxxx of any one of the following: (a) Qualifying
Private Placement (as that term in Section 6(d)), (b) Qualifying Public Offering
(as that term is defined in Section 6(c)), or (c) Qualifying Transaction (as
that term is defined in Section 6(e)), for a period of twelve (12) months (the
“Qualified Period”) from the closing of such transaction the Company will seek
to engage Maxim to act as its lead-or co-underwriter on a public offering the
company’s securities which GuruNet elects to consummate during that period, if
any, subject to the following:
| a) |
Xxxxx
shall agree to perform such engagement on terms which are mutually
acceptable to the Company and Maxim. The parties shall execute and deliver
to each other a written engagement which will supplement the terms of this
Agreement. The company shall not offer to retain nay other investment
banking firm in connection with such public offering of securities on
terms more favorable than those discussed with Maxim without offering to
retain Maxim on such more favorable terms. |
| b) |
Maxim
is, in fact, capable of performing as the lead- or co-underwriter in the
context of size and nature of the proposed public offering, and proposes
terms, including anticipated offering price and net proceeds and dilution
to the Company, and nature of syndication effort, which are mutually
acceptable to the Company and Maxim. |
| c) |
As
used in this Agreement, a public offering of GuruNet’s securities for
which Xxxxx acts as lead underwriter and sells at least 50% of the
securities being offered to the investors introduced by Xxxxx, and in
which the gross cash proceeds to the Company, after payment of underwriter
fees and expenses, are at least $10,000,000, is hereafter referred to as a
“Qualifying Public Offering”, unless the Company engages Maxim to
underwrite a Qualifying Public Offering of smaller
size. |
| d) |
As
used in this Agreement, in the event that Maxim, as lead placement agent,
completes a private placement for the Company, in which the gross cash
proceeds to the Company, are at least $5,000,000, such a private placement
shall be referred to as a “Qualifying Private Placement”, unless the
Company engages Maxim to act as a placement agent for a Qualifying Private
Placement of a smaller size. |
| e) |
As
used in this Agreement, an M&A Transaction of any Aggregate
Transaction Value, is hereafter referred to as a “Qualifying
Transaction”. |
7. Other
Activities. The
Company acknowledges that Maxim has been, and my 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, 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. Termination:
Survival of Provisions.
The
minimum term of this Agreement is six (6) months (“Term”). Either Maxim or the
Company may terminate this Agreement at any time upon the 30-day prior written
notice to the other party. 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 reimbursements are earned or owed as of the
Termination Date) or upon the closing of the Transaction or any applicable
portion thereof (in the event such fees are due pursuant to the terms of Section
3 thereof). Notwithstanding anything expressed or implied here in to the
contrary: (i) any 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, 7, 8, 9, 10
and 15 shall survive the termination of this Agreement.
9. Notes.
All
notices provided hereunder shall be given in writing and either delivered
personally or by overnight courier service or sent by certified mail, return
receipt requested, or by facsimile transmission, if to Maxim, to Maxim Group
LLC, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, XX 00000, Attention: Xxxxxx X. Xxxx, Esq.,
General Counsel, Fax No. (000) 000-0000, and if to the Company, to the address,
set forth on the first page of this Agreement. Any notice delivered personally
or by fax shall be deemed given by overnight courier shall be deemed given on
the next business day after delivery to the overnight courier, and any notice
given by certified mall shall be deemed given upon the second business day after
the certification thereof.
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 of the purpose of any suit, action or other proceeding uprising 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 assumes
in this Agreement shall be binding upon the parties hereto and their respective
successors and assigns. Notwithstanding anything contained herein to the
contrary, neither Xxxxx nor the Company shall assign any of its obligations
hereunder without the prior written consent of the other party, which consent
shall not be unreasonably withheld.
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.
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 any
of the 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 on any
subsequent occasion. Any waiver must be in writing.
16. Counterparts. This
Agreement may be executed in any number or 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.
If the
foregoing correctly sets forth our agreement, please sign the enclosed copy of
this Agreement in the space provided below and return it to us.
Very
truly yours,
Maxim
Group, LLC
By:_________________________
Xxxxxxxx
X. Xxxxxx
Managing
Director
By:___________________________
Xxxxxxx
X. Xxxxxx
Head of
Investment Banking
Agreed to
and accepted this 20
day of
January, 2005
By:___________________________
Xx.
Xxxxxx X. Xxxxxxxxxx
Chairman
and CEO
