Midtown Partners & Co., LLC 4218 West Linebaugh Avenue Tampa, FL 33624 Phone: 813.885.5744 ♦ Fax: 813.885.5911
Midtown
Partners & Co., LLC
0000
Xxxx Xxxxxxxxx Xxxxxx
Xxxxx,
XX 00000
Phone: 000.000.0000 ♦
Fax:
000.000.0000
|
June 25,
2009
CONFIDENTIAL
I.
Xxxxxxx Xxxx, President and CEO
0000
Xxxxx Xxxxxx Xxxxxxx
Xxxxxxxxx,
XX 00000
Dear
Xxxxxxx:
This
letter (the “Agreement”) confirms Midtown Partners & Co., LLC (“Midtown”)
engagement as placement agent for Neuralstem, Inc.(the “Company”), in connection
with the proposed private placement (the “Offering”) of up to one million
dollars (USD$1,000,000) of the Company’s securities (the “Securities”) of the
Company’s securities (the “Securities”). It is anticipated that the
Securities will be sold only to “accredited investors” (the “Investors”), as
such term is defined in Rule 501(a) of Regulation D, promulgated under the
United States Securities Act of 1933, as amended, pursuant to an exemption from
registration under Rule 506 of Regulation D.
Subject
to the terms and conditions of this Agreement, the Company hereby appoints
Midtown to act on a best efforts basis as its exclusive placement agent to
privately place the Securities in an amount and on terms and conditions
satisfactory to the Company. Midtown hereby accepts such engagement
and agrees to use its best efforts to privately place the Securities with
potential investors. The Company shall promptly refer to Midtown all
offers, inquiries and proposals relating to any placement of the Securities made
at any time during the Term (as defined below).
1. Services to be
Rendered. In
connection with the Offering, as requested, Midtown will assist the Company in
structuring the proposed Offering, identifying, contacting and evaluating
potential purchasers, preparing executive summaries or business plans,
facilitating potential purchasers’ due diligence investigations, analyzing and
advising on the financial implications of offers, preparing and making
presentations to the Company's Board of Directors, formulating negotiation
strategies and conducting negotiations, as appropriate, and in such other
matters as may be agreed upon from time to time by Midtown and the Company (the
“Services”).
In
connection with this Agreement, the Company agrees to keep Midtown up to date
and apprised of all material business, market and current legal practices and
developments related to the Company and its operations and management,
including, but not limited to providing Midtown with lists of current
shareholders and investors and potential investors. Midtown shall
devote such time and effort, as it deems commercially reasonable under the
circumstances in rendering the Services. Midtown cannot guarantee
results on behalf of the Company, but shall pursue all avenues that it deems
reasonable through its network of contacts.
2. Compensation. For
Midtown’s services hereunder, the Company agrees to pay Midtown the fees
outlined below upon closing of a sale of any of the Securities (in each
instance, a “Closing”):
(a) a
placement fee equal to seven percent (7%) of the gross purchase price paid for
the Securities, payable in full, in cash, at a Closing for the sale of any of
the Securities.
(b) at
each Closing, the Company shall issue to Midtown, or its permitted assigns,
warrants (the “PA Warrants”) to purchase that number of shares of common stock
of the Company equal to five percent (5%) of the number of shares of common
stock of the Company issued at each such Closing. The PA Warrants shall have a
exercise price equal to a twenty five percent (25%) premium to the stock’s
offering price on the Closing Date, provide for cash exercise, shall not be
callable or redeemable by the Company, shall provide for piggy-back registration
rights, shall be transferable by Midtown to its representatives and agents at
Closing in compliance with FINRA rules, and, except as set forth above,
otherwise have the same terms and conditions of the warrants issued to the
Investors.
An escrow
account with a third party agent approved by the parties hereto will be used for
each closing during the Term. All consideration due Midtown shall be
paid to Midtown directly from such escrow. Any fee charged by the
escrow agent in the performance of its duties as escrow agent shall be borne by
the Company.
3. Expenses. It
is acknowledged and agreed that the Company shall bear all costs incurred by it
incidental to the advancement and completion of the Offering,
4.
Information. The Company will
furnish Midtown such information with respect to the Company and access to such
Company personnel and representatives, including the Company’s auditors and
counsel, as Midtown may request in order to permit Midtown to advise the Company
and to assist the Company in preparing offering materials for use in connection
with the Offering (including, but not limited to: a business plan; executive
summary; three (3) year historical income statement, statement of cash flows,
and balance sheet; five (5) year projected financial statements; use of proceeds
statement; investor presentation; valuation analysis) (collectively, the
“Offering Materials”). The Company will be solely responsible for the
contents of the Offering Materials and other information provided to investors
in connection with the Offering. The Company represents and warrants
to Midtown that the Offering Materials will not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The Company agrees to advise Midtown promptly upon
the Company becoming aware of the occurrence of any event or change in
circumstance that results or might reasonably be expected to result in the
Offering Materials containing any untrue statement of a material fact or
omitting to state a material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not
misleading. The Company authorizes Midtown to provide the Offering
Materials to investors in connection with the Offering. The Company
and Midtown shall have the right to approve every form of letter, circular,
notice, memorandum or other written communication from the Company or any person
acting on its behalf in connection with the Offering.
5. Termination and
Survival. This Agreement
shall terminate on the earlier of the (i) first (1st)
anniversary of the execution thereof, or (ii) the closing of the Offering,
subject to the extension thereafter as may be agreed in writing by the parties
(as may be extended, the “Term”); provided, this Agreement may be terminated
prior to expiration of the Term, by Midtown for any reason at any time upon
thirty (30) days prior written notice. Notwithstanding the foregoing,
it is understood that the provisions of paragraphs 2 (to the extent fees are
payable prior to termination), Paragraph 2(c) (to the extent fees are payable
after termination), , 4 (the second, third and fourth sentences only), and
sections 6 through 16 of this Agreement shall remain operative and in full force
and effect regardless of any termination or expiration of this
Agreement.
- 2
-
In the
event of termination, the Placement Agent shall be immediately paid in full on
all items of compensation and expenses payable to the Placement Agent pursuant
hereto, as of the date of termination.
6. Confidentiality
of Advice. Except as
otherwise provided in this paragraph, any written or other advice rendered by
Midtown pursuant to its engagement hereunder are solely for the use and benefit
of the Company’s executive management team and Board of Directors and
shall not be publicly disclosed in whole or in part, in any manner or
summarized, excerpted from or otherwise publicly referred to or made available
to third parties, other than representatives and agents of the Company’s
executive management team and Board of Directors who also shall not disclose
such information, in each case, without Midtown’s prior approval, unless in the
opinion of counsel and after consultation with Midtown, such disclosure is
required by law. In addition, Midtown may not be otherwise publicly
referred to without its prior written consent. The Company
acknowledges that Midtown and its affiliates are in the business of providing
financial services and consulting advice to others. Nothing herein
contained shall be construed to limit or restrict Midtown in conducting such
business with respect to others, or in rendering such advice to others, except
as such advice may relate to matters relating to the Company’s business and
properties and that might compromise confidential information delivered by the
Company to Midtown.
7. Obligations
Limited. Midtown shall have no obligation to make any
independent appraisals of assets or liabilities or any independent verification
of the accuracy or completeness of any information provided it in the course of
this engagement and shall have no liability in regard thereto.
8. Third Party
Beneficiaries. This Agreement is made solely for the benefit
of the Board of Directors of the Company, Midtown and other Indemnified Persons
(as defined herein), and their respective successors, assigns, heirs and
personal representatives, and no other person shall acquire or have any right
under or by virtue of this Agreement.
9. Representations
and Warranties. The Company represents and warrants that this
Agreement has been duly authorized, executed and delivered by the Company and
constitutes a legal, valid and binding obligation of the Company.
10.
Indemnification. In
connection with and as part of the engagement contemplated herein, the Company
agrees to indemnify, defend and hold Midtown harmless in accordance with the
indemnification rider attached hereto as Exhibit
A.
11.
Non-Circumvention. The
Company agrees not to circumvent, avoid, bypass, or obviate, directly or
indirectly, the intent of this Agreement, including the Company shall not permit
its subsidiaries and its other affiliated entities to sell securities with the
effect of avoiding payment of fees in connection with this
Offering.
12.
Governing Law;
Jurisdiction; Jury Trial. All questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be governed by the internal laws of the State of Florida, without giving effect
to any choice of law or conflict of law provision or rule (whether of the State
of Florida or any other jurisdictions) that would cause the application of the
laws of any jurisdictions other than the State of Florida. Each party
hereby irrevocably submits to the exclusive jurisdiction of the state and
federal courts sitting in Hillsborough County, Florida, for the adjudication of
any dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein, and hereby irrevocably waives, and
agrees not to assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, that such suit, action
or proceeding is brought in an inconvenient forum or that the venue of such
suit, action or proceeding is improper. Each party hereby irrevocably
waives personal service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof to such party at the
address for such notices to it under this Agreement and agrees that such service
shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way
any right to serve process in any manner permitted by law. EACH PARTY HEREBY
IRREVOCABLY WAIVES ANY RIGHT TO A JURY TRIAL, AND AGREES NOT TO REQUEST, A JURY
TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR
ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY.
- 3
-
13.
Legal Fees and
Costs. If a legal action is initiated by any party to this
Agreement against another, arising out of or relating to the alleged performance
or non performance of any right or obligation established hereunder, or any
dispute concerning the same, any and all fees, costs and expenses reasonably
incurred by each successful party or his, her or its legal counsel in
investigating, preparing for, prosecuting, defending against, or providing
evidence, producing documents or taking any other action in respect of such
action shall be the joint and several obligation of and shall be paid or
reimbursed by the unsuccessful party(ies).
14.
Severability. If
one or more provisions of this Agreement are held to be unenforceable under
applicable law, the parties agree to renegotiate such provision in good faith.
In the event that the parties cannot reach a mutually agreeable and enforceable
replacement for such provision, then (a) such provision shall be excluded from
this Agreement, (b) the balance of the Agreement shall be interpreted as if such
provision were so excluded and (c) the balance of the Agreement shall be
enforceable in accordance with its terms.
15.
Future
Advertisements. The Company agrees that Midtown has the right
to place advertisements describing its services to the Company under this
Agreement in its own marketing materials as well as financial and other
newspapers and journals at its own expense following the final closing of the
Offering.
16.
Miscellaneous. (a)
This Agreement and the documents referred to herein constitute the entire
agreement between the parties hereto pertaining to the subject matter hereof,
and any and all other written or oral agreements existing between the parties
hereto are expressly cancelled; (b) Only an instrument in writing executed by
the parties hereto may amend this Agreement; (c) The failure of any party to
insist upon strict performance of any of the provisions of this Agreement shall
not be construed as a waiver of any subsequent default of the same or similar
nature, or any other nature; (d) This Agreement may be executed in two (2) or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute one (1) instrument; (e) This Agreement shall be
binding on and inure to the benefit of the parties hereto and their respective
successors and permitted assigns. The rights and obligations of the
parties under this Agreement may not be assigned or delegated without the prior
written consent of both parties, and any purported assignment without such
written consent shall be null and void.
If the
foregoing correctly sets forth the understanding between the Placement Agent and
the Company, please so indicate in the space provided below for that purpose
within ten (10) days of the date hereof or this Agreement shall be
withdrawn and become null and void. The undersigned parties hereto have
caused this Agreement to be duly executed by their authorized representatives,
pursuant to corporate board approval and intend to be legally
bound.
- 4
-
By:
|
||
I.
Xxxxxxx Xxxx, President & CEO
|
||
MIDTOWN
PARTNERS & CO., LLC
|
||
By:
|
||
Xxxxx
Xxxxxx,
President
|
- 5
-
EXHIBIT
A
INDEMNIFICATION AND
CONTRIBUTION
For
purposes of this Exhibit A, unless the
context otherwise requires, “Midtown” shall include Midtown, any affiliated
entity, and each of their respective officers, directors, employees, partners
and controlling persons within the meaning of the federal securities laws and
the successors, assigns, heirs and personal representatives of the foregoing
persons (collectively, the “Indemnified Persons”).
The
Company shall indemnify, defend and hold Midtown harmless against any losses,
claims, damages, liabilities, costs and expenses (including, without limitation,
any legal or other expenses incurred in connection with investigating, preparing
to defend or defending against any action, claim, suit or proceeding, whether
commenced or threatened and whether or not Midtown is a party thereto, or in
appearing or preparing for appearance as a witness), based upon, relating to or
arising out of or in connection with advice or services rendered or to be
rendered pursuant to the Agreement, the transaction contemplated thereby or
Midtown’s actions or inactions in connection with any such advice, services or
transaction (including, but not limited to, any liability arising out of (i) any
misstatement or alleged misstatement of a material fact in any offering
materials and (ii) any omission or alleged omission from any offering materials,
including, without limitation of a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading), except to the extent that any such loss, claim, damage,
liability, cost or expense results solely from the gross negligence or bad faith
of Midtown in performing the services which are the subject of the
Agreement. If for any reason the foregoing indemnification is
unavailable to Midtown or insufficient to hold it harmless, then the Company
shall contribute to the amount paid or payable by Midtown as a result of such
loss, claim, damage or liability in such proportion as is appropriate to reflect
the relative benefits received by the Company and its stockholders on the one
hand and Midtown on the other hand, or, if such allocation is not permitted by
applicable law, not only such relative benefits but also the relative fault of
the Company and Midtown, as well as any relevant equitable considerations;
provided, however, that, to the extent permitted by applicable law, Midtown
shall not be responsible for amounts which in the aggregate are in excess of the
amount of all fees actually received from the Company in connection with the
engagement. No person guilty of fraudulent misrepresentation (as such
term has been interpreted under Section 11(f) of the Securities Act of 1933)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. Relative benefits to Midtown, on the
one hand, and the Company and its stockholders, on the other hand, with respect
to the engagement shall be deemed to be in the same proportion as (i) the total
value paid or proposed to be paid or received or proposed to be received by the
Company or its stockholders, as the case may be, pursuant to the potential
transaction, whether or not consummated, contemplated by the engagement bears to
(ii) all fees paid to Midtown by the Company in connection with the
engagement. Midtown shall not have any liability to the Company in
connection with the engagement, except to the extent of its gross negligence or
willful misconduct.
The
Company also agrees to promptly upon demand reimburse Midtown for its legal and
other expenses reasonably incurred by it in connection with investigating,
preparing to defend, or defending any lawsuits, investigations, claims or other
proceedings in connection with any matter referred to in or otherwise
contemplated by the Agreement; provided, however, that in the event a final
judicial determination is made to the effect that Midtown is not entitled to
indemnification hereunder, Midtown will remit to the Company any amounts that
have been so reimbursed.
- 6
-
The
Company shall not be liable for any settlement of any action, claim, suit or
proceeding (or for any related losses, damages, liabilities, costs or expenses)
if such settlement is effectuated without its written consent, which shall not
be unreasonably withheld. The Company further agrees that it will not
settle or compromise or consent to the entry of any judgment in any pending or
threatened action, claim, suit or proceeding in respect of which indemnification
or contribution may be sought hereunder (whether or not Midtown is a party
therein) unless the Company has obtained an unconditional release of Midtown,
from all liability arising therefrom. The reimbursement, indemnity
and contribution obligations of the Company set forth in this Agreement shall be
in addition to any liability which the Company may otherwise have to
Midtown.
Any
Indemnified Persons that are not signatories to this Agreement shall be deemed
to be third party beneficiaries of this Agreement.
- 7
-