Empire Asset Management Company New York, NY 10006 May 12, 2008
Exhibit
10.53
CONFIDENTIAL
Empire
Asset Management Company
0 Xxxxxx
Xxxxxx, 00xx Xxxxx
Xxx
Xxxx,
XX 00000
May
12,
2008
Xxxxxxxxxxxxxxx
00, 0xx xxxxx.
XX-000
00
Xxxxxxxxx, Xxxxxx
| Attention: |
Xx.
Xxxxxx Xxxxxx,
|
Chief
Executive Officer
Xx.
Xxxxxx:
Reference
is made to that certain letter agreement dated February 19, 2008 (the
“Engagement Letter”) between Empire Asset Management Company ("Empire") and
Neonode, Inc., a Delaware corporation (“Neonode” or the “Company”) pursuant to
which the Company engaged Empire to act as its financial advisor and exclusive
placement agent during the Term. Capitalized terms used but not defined herein
shall have the meanings ascribed to such terms in the Engagement Letter.
This
letter agreement shall serve to confirm the Company’s request and Empire’s
acceptance to act as the Company’s financial advisor with respect to a
transaction pursuant to which the Company shall offer (the “Warrant Offering”),
for a period expiring May 15, 2008, subject to extension as may be agreed by
the
Company and Empire (the “Warrant Offering Term”), to holders (the
“Warrantholders”) of an aggregate of 5,614,453 warrants issued by the Company
(the “Exercise Warrants”), each exercisable to purchase one share of the
Company’s common stock, par value $0.01 per share (the “Common Stock”) at
current exercise prices ranging from $2.83 to $16.65 per share (i) to reduce
the
exercise price per Exercise Warrant to the closing sale price per share of
the
Common Stock on May 14, 2008 plus $0.01, for those Warrantholders agreeing
to
exercise the Exercise Warrants for cash only (the “Exercise Warrantholders”) or
(ii) to facilitate the transfer of Exercise Warrants by Warrantholders who
do
not wish to exercise all of such Exercise Warrants to third parties located
by
the Placement Agent (the “Transferee Warrantholders”), with such Transferee
Warrantholders simultaneously exercising such Warrants for cash at the reduced
exercise price. The specific terms of the Warrant Offering will be described
in
certain transaction documents and disclosure materials (collectively and as
may
be amended and supplemented, the “Disclosure Materials”) that the Company and
Empire will negotiate in good faith prior to the commencement of the Warrant
Offering.
The
Warrant Offering (also referred to herein as the “Private Placement”) will be
made in accordance with an exemption from the registration requirements of
the
Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder (collectively, the “Act”) provided by Regulation D under the Act
(“Regulation D”) and the qualification and registration requirements of
applicable state and foreign securities or blue sky laws and regulations.
Investors in the Private Placement will be persons who qualify as “accredited
investors” under Regulation D.
1.
Engagement.
Neonode
hereby engages Empire during the Warrant Offering Term (as hereinafter defined)
as its exclusive financial advisor with respect to the Private Placement. In
such capacity, Empire will provide the Company with financial advice and
assistance in connection with the Private Placement, which may include assisting
the Company in planning the Private Placement, reviewing with the Company and
its counsel all preliminary and final Disclosure Materials and subscription
documents, and working with the Company in identifying potential Transferee
Holders and using Empire’s reasonable efforts to assist in locating such
Transferee Holders. Empire reserves the right to retain other properly licensed
and registered broker-dealers to act as sub-agents on Empire’s behalf and to
retain foreign representatives to act on Empire’s behalf for offers to
non-United States persons (as defined for purposes of the Act). All documents
to
be used in the Private Placement, including, without limitation, the Disclosure
Materials, will be reviewed by, and subject to the approval of, Empire and
its
counsel prior to their use in making offers or sales pursuant to the Warrant
Offering. The Company will be responsible for updating, amending and
supplementing the Disclosure Materials prior to the closing of the Private
Placement as required by applicable laws. The Company represents and agrees
that
it will not during the Term, directly or indirectly, take any action to offer
any of the securities for sale to, or solicit any offers to buy from, any person
or persons otherwise than through Empire as its exclusive placement agent in
connection with the Private Placement. In order to coordinate the efforts of
Empire and the Company to most efficiently execute the Private Placement, the
Company will promptly inform Empire of any inquiries received by the Company
(or
its directors, officers, employees, agents or shareholders) from a third party
in respect of the Private Placement and will not initiate any discussions in
respect of the Private Placement with such third party without first consulting
with Empire. Neonode will furnish to Empire all documents and information
regarding Neonode and its business, operations, financial matters and
shareholders that Empire may reasonably request in connection with it services
hereunder. Empire shall have no authority to bind Neonode to any specific terms
of a Private Placement or other obligation and Neonode shall have the right
to
reject any proposed terms for a Private Placement or refuse to consummate the
Private Placement without incurring any obligation to Empire except as provided
in this agreement.
2.
Success
Fee.
The
Company agrees to pay Empire as compensation for its services under this
engagement, the following fees in connection with the Private
Placement
(a) a
cash
fee equal to 10% of the gross proceeds received at any closing of the Private
Placement through the exercise of Exercise Warrants by Exercise Warrantholders
and Transferee Warrantholders; and
(b) 5
year
warrants to purchase a number of shares of common stock equal to 10% of the
gross number of shares (i) that are issued upon exercise of the Exercise
Warrants at an exercise price equal to the reduced exercise price of said
warrants and (ii) that are issuable upon exercise of any new warrants that
are
issued to Exercise Warrantholders and Transferee Warrantholders at an exercise
price equal to the exercise price of the new warrants The foregoing warrants
shall contain the same provisions (including, without limitation, anti-dilution
protections and registration rights) that are applicable to the Exercise
Warrants and new warrants, as the case may be. The foregoing warrants shall
be
issued to Empire and/or its designees.
Unless
otherwise specified in this Agreement, compensation which is payable to Empire
pursuant to this Agreement shall be paid by the Company to Empire upon the
closing of the Private Placement.
3.
Intentionally
Omitted.
4.
Expenses.
Neonode
shall bear all of its expenses in connection with the Private Placement. In
addition, if the Private Placement is consummated, Empire will be entitled
to
withhold at the initial closing from the amount otherwise due to the Company
a
non-accountable expense allowance equal to Thirty Five Thousand Dollars
($35,000). Lastly, upon the reasonable determination by Empire that a FINRA
Rule
2710 filing is required in connection with the registration statement relating
to the resale of the securities sold in the Private Placement, the Company
will
pay all filing fees, costs and reasonable legal fees in connection with such
filing to be prepared by the Empire’s counsel. If the Private Placement is not
consummated for any reason, Empire will be entitled, upon presentation of a
written accounting therefor in reasonable detail, to prompt reimbursement of
its
actual, out-of-pocket expenses related to the Private Placement, including
but
not limited to fees and expenses of our legal counsel, travel expenses, and
due
diligence related expenditures. The provisions of this paragraph shall survive
the closing and any termination of the Private Placement.
CONFIDENTIAL
5.
Term.
The
term of this agreement (“Term”) shall commence on the date hereof and shall
until expiration or termination of the Warrant Offering Term.
In
addition, upon consummation of the Warrant Offering, the term of the Engagement
Letter shall automatically be extended for a one year period commencing upon
the
closing of the Warrant Offering. The foregoing proviso and the provisions of
paragraphs 4, 7
and 8
and Exhibit A to this agreement shall survive any termination of this
agreement.
6. Further
Representations and Covenants of Neonode.
(a) The
Company represents and agrees that (i) it has the corporate power and authority
to enter into and perform this agreement and all corporate action necessary
for
the authorization, execution, delivery and performance of this Agreement has
been taken, (ii) this agreement constitutes a legal, valid and binding
obligation of Neonode enforceable in accordance with its terms, (iii) the
execution and performance of this Agreement by the Company and the offer and
sale of the securities in the Private Placement will not violate any provision
of the Company’s charter or bylaws or any agreement or other instrument to which
the Company is a party or by which it is bound and (iv) any necessary approvals,
governmental and private, will be obtained by the Company before the closing
of
the Private Placement.
(b)
The
Company represents and warrants that the Disclosure Materials 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 or
previously made, in light of the circumstances under which they made not
misleading. The Company will advise Empire immediately of the occurrence of
any
event or any other change known to the Company which results in the Disclosure
Materials containing an untrue statement of a material fact or omitting to
state
a material fact required to be stated therein or necessary to make the
statements therein or previously made, in light of the circumstance under which
they were made, not misleading.
(c) The
Company acknowledges and agrees that Empire’s obligations to commence the
Private Placement may be subject to execution of a Placement Agency Agreement
on
customary terms and incorporating the principal terms hereof. In the absence
of
such Placement Agency Agreement, the Company agrees that Empire may rely upon,
and will be named as a third party beneficiary of, the representations and
warranties, and applicable covenants, set forth in any subscription agreement
or
similar agreement that the Company executes with investors in the Private
Placement. The Company will, at the closing of the Private Placement, furnish
Empire with a favorable opinion of its outside counsel in form and substance
reasonably acceptable to Empire and its legal counsel. In addition, at the
closing of the Private Placement, the Company will provide Empire with the
same
certificates of the officers of the Company as are furnished to the investors
and such other certification, opinions and documents as Empire or its counsel
may deem appropriate, in form and substance satisfactory to Empire and its
counsel.
(d) The
Company agrees to provide Empire with due diligence materials as we request
or
copies of due diligence materials which are provided to investors in the Private
Placement.
CONFIDENTIAL
(e) The
Company will file appropriate notices on Form D with the SEC, as well as all
filings required to be made with respect to state and foreign securities or
blue
sky laws and regulations.
(f) The
Company will not, for a period of six months following the final closing date
of
the Private Placement, offer for sale or sell any securities unless, in the
opinion of the Company’s counsel, concurred in by Empire’s counsel, such offer
or sale does not jeopardize the availability of the exemptions from the
registration and qualification requirements of the Act and state and foreign
securities or blue sky laws and regulations with respect to the Private
Placement, and the Company has not engaged in any such offering during the
six
months prior to the date of this Agreement.
(g) In
the
event the Warrant Offering is consummated, and for so long as Empire elects,
the
Company agrees that it shall take, and shall cause its Board of Directors to
take, all action within its powers to nominate two (2) representatives
designated by Empire and/or significant Transferee Warrantholders (the “Director
Designees”) as members of the Board of Directors, who shall be named at or
promptly following the closing of the Warrant Offering. In the event that any
Director Designee is unable to serve, or once having commenced to serve, is
removed or withdraws from the Board of Directors (a “Withdrawing Director”), the
Company agrees that it shall take, and shall cause its Board of Directors to
take, all action within its powers to nominate or elect an individual designated
by Empire and/or the Transferee Warrantholders as such Withdrawing Director’s
replacement. In addition to the foregoing board designee rights, Empire shall
have the right to send Xxxxxx Xxxxxxxx (“Xxxxxxxx”) to observe each meeting of
the Board of Directors for a period of eighteen (18) months. The Company agrees
to give Xxxxxxxx notice of each such meeting (or copies of any consents in
lieu
of meetings) and to provide Xxxxxxxx with an agenda and minutes of the meeting
no later than it gives such notice and provides such items to the directors.
In
addition, as a board observer, Xxxxxxxx shall be entitled to receive
reimbursement for all reasonable costs incurred in attending such meetings
including, but not limited to, food, lodging and transportation.
(h) In
the
event the Warrant Offering is consummated, the Company and Empire will enter
into a financial advisory agreement for a term of eighteen (18) months pursuant
to which the Company will agree to pay Empire a monthly fee of $5,000 per month
in consideration of the provision of regular and customary financial advisory
services as are reasonably requested by the Company, provided that Empire shall
not be required to undertake duties not reasonably within the scope of the
financial advisory services in which it is generally engaged.
(i) Provided
that such person(s) are bound by appropriate non disclosure agreements, the
Company shall cause its management to be available for weekly telephone calls
with Empire and/or significant Transferee Warrantholders to discuss current
financial and business updates and the Company shall make financial information,
product updates and any other substantive information available to such persons
upon request.
7. Indemnification.
Neonode
agrees to indemnify and hold harmless Empire in accordance with the agreement
set forth on Exhibit A attached hereto, the term of which are specifically
incorporated herein by reference.
8. Miscellaneous.
(a)
Governing Law; Jurisdiction. This agreement shall be governed by and construed
under the laws of the State of New York, without giving effect to principles
of
conflict of laws. The parties agree that any dispute, claim or controversy
directly or indirectly relating to or arising out of this Agreement, the
termination or validity hereof, any alleged breach of this Agreement or the
engagement contemplated hereby (any of the foregoing, a “Claim”) shall be
submitted to JAMS, or its successor, in New York, for final and binding
arbitration in front of a panel of three arbitrators with JAMS in New York,
New
York under the JAMS Comprehensive Arbitration Rules and Procedures (with each
of
Empire and the Company choosing one arbitrator, and the chosen arbitrators
choosing the third arbitrator). The arbitrators shall, in their award,
allocate all of the costs of the arbitration, including the fees of the
arbitrators and the reasonable attorneys’ fees of the prevailing party, against
the party who did not prevail. The award in the arbitration shall be final
and
binding. The arbitration shall be governed by the Federal Arbitration Act,
9
U.S.C. Sec.1-16, and the judgment upon the award rendered by the arbitrators
may
be entered by any court having jurisdiction thereof. The Company and
Empire agree and consent to personal jurisdiction, service of process and venue
in any federal or state court within the State and County of New York in
connection with any action brought to enforce an award in
arbitration.
CONFIDENTIAL
(b)
Notices. Whenever notice is required to be given pursuant to this agreement,
such notice shall be in writing and shall either be mailed by certified first
class mail, postage prepaid, delivered personally, or sent by recognized
overnight courier, addressed to the parties at the respective addresses set
forth above. Notice shall be deemed given, if sent by mail, on the third day
after deposit in a United States post office receptacle, or if delivered
personally or by courier, upon receipt. Any party may change such address by
like notice.
(c)
Entire Agreement; Binding Effect. This agreement, together with the Engagement
Letter (which continues in full force and effect in accordance with its terms
except to the extent specifically amended herein), constitutes the entire
agreement between
Neonode
and Empire with respect to the subject matter hereof and supersedes and cancels
any other agreements, oral or written, with respect thereto. This agreement
may
not be assigned by either party without the prior written consent of the other
party. This agreement shall be binding on the parties and their respective
successors and permitted assigns.
(d)
No
Commitment. The execution of this Agreement does not constitute a commitment
by
Empire or the Company to consummate any transaction contemplated hereunder
and
does not ensure the successful placement of securities of the Company or the
success of Empire with respect to securing any financing on behalf of the
Company. No promises or representations have been made except as expressly
set
forth in this agreement and the parties have not relied on any promises or
representations except as expressly set forth in this agreement.
(e)
Other
Services. In the event that other services are required and/or transactions
which are the result of Empire’s efforts that are not as contemplated herein,
the parties hereto shall negotiate in good faith to determine a mutually
acceptable level of compensation in such an eventuality.
(f)
Severability. If any provision of this Agreement is determined to be invalid
or
unenforceable in any respect, then such determination will not affect such
provision in any other respect or any other provision of this Agreement, which
will remain in full force and effect. No material provision of this agreement
shall be deemed waived and no breach excused, unless such waiver or consent
excusing the breach shall be in writing and signed by the party to be charged
with such waiver or consent.
(g) Independent
Contractor. In carrying out its responsibilities under this letter, the parties
agree that Empire shall be an independent contractor with complete supervision
and control over its own activities, and shall have no right or authority to
assume or create any obligation on behalf of the Company and Empire’s engagement
by the Company shall not create any partnership, joint venture or similar
business relationship between the Company and Empire. Empire shall have no
restrictions on its ability to provide services to companies other than the
Company, except as stated herein. Empire
shall be under no obligation hereunder to make an independent appraisal of
assets or investigation or inquiry as to any information regarding, or any
representations of, the Company and shall have no liability hereunder in regard
thereto.
CONFIDENTIAL
(h) Advice
Given; Public Announcements. The Company agrees that all advice given by Empire
n connection with its engagement hereunder is for the benefit and use of the
Company in considering the Private Placement to which such advice relates,
and
the Company agrees that no such advice shall be used for any other purpose
or be
disclosed, reproduced, disseminated, quoted or referred to at any time, in
any
manner or for any purpose, nor shall any public references to Empire be made
by
or on behalf of the Company, in each case without Empire’s prior written
consent, which consent shall not be unreasonably withheld.
(i)
Counterparts. This Agreement may be executed in one or more counterparts, all
of
which when taken together shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party, it being understood that both parties need not
sign the same counterpart. In the event that any signature is delivered by
facsimile transmission or by e-mail delivery of a “.pdf” format data file, such
signature shall create a valid and binding obligation of the party executing
(or
on whose behalf such signature is executed) with the same force and effect
as if
such facsimile or “.pdf” signature page were an original thereof.
Please
confirm your agreement to the foregoing below whereupon this letter shall
constitute a binding agreement between us.
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Very
truly yours,
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EMPIRE
ASSET MANAGEMENT COMPANY
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By:
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/s/
Xxxxx Xxxxx
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Xxxxx
Xxxxx
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President
& CEO
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Confirmed
and agreed to:
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By:
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/s/
Xxxxxx Xxxxxx
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Xxxxxx
Xxxxxx
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Chief
Executive Officer
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CONFIDENTIAL
EXHIBIT
A
May
12,
2008
Empire
Asset Management Company
0 Xxxxxx
Xxxxxx, 00xx Xxxxx
Xxx
Xxxx,
XX 00000
Gentlemen:
In
connection with our engagement of Empire Asset Management Company ("Empire")
as
our financial advisor, we hereby agree to indemnify and hold harmless Empire
and
its affiliates, and the respective controlling persons, directors, officers,
shareholders, agents (including sub-agents) and employees of any of the
foregoing (collectively the "Indemnified Persons"), from and against any and
all
claims, actions, suits, proceedings, damages, liabilities and expenses incurred
by any of them (including the reasonable fees and expenses of counsel),
(collectively a "Claim"), which are related to or arise out of (i) any actions
taken or omitted to be taken by us, (ii) any actions taken or omitted to be
taken by any Indemnified Person in connection with Empire's engagement or
services on our behalf, or (iii) any material misstatement or alleged
misstatement, or omission or alleged omission to state a material fact required
to be stated or necessary to make the statements made in light of the
circumstances not misleading, in any materials disseminated or filed by us
or by
another party to a Private Placement ((i), (ii) and (iii) are collectively
referred to as the “Matters”), and we shall reimburse any Indemnified Person for
all expenses (including the reasonable fees and expenses of counsel) incurred by
such Indemnified Person in connection with investigating, preparing or defending
any such claim, action, suit or proceeding, whether or not in connection with
pending or threatened litigation in which any Indemnified Person is a party.
We
will not, however, be responsible to any Indemnified Person for any Claim which
is finally judicially determined to have resulted from the gross negligence
or
willful misconduct of such Indemnified Person.
We
also
agree that no Indemnified Person shall have any liability (whether direct or
indirect, in contract or tort or otherwise) to us or our security holders or
creditors related to, arising out of, or in connection with, any Matters, the
engagement of Empire pursuant to, or the performance by Empire of the services
contemplated by, our engagement letter, except to the extent any loss, claim,
damage or liability if found in a final judgment by a court of competent
jurisdiction to have resulted from Empire’s gross negligence
or willful misconduct.
We
further agree that we will not, without the prior written consent of Empire,
settle, compromise or consent to the entry of any judgment in any pending or
threatened Claim in respect of which indemnification may be sought hereunder
(whether or not any Indemnified Person is an actual or potential party to such
Claim), unless such settlement, compromise or consent includes an unconditional,
irrevocable release of each Indemnified Person hereunder from any and all
liability arising out of such Claim.
Promptly
upon receipt by an Indemnified Person of notice of any complaint or the
assertion or institution of any Claim with respect to which indemnification
is
being sought hereunder, such Indemnified Person shall notify us in writing
of
such complaint or of such assertion or institution but failure to so notify
us
shall not relieve us from any obligation we may have hereunder, unless and
only
to the extent such failure results in the forfeiture by us of substantial rights
and defenses. If we so elect or are requested by such Indemnified Person, we
will assume the defense of such Claim, including the employment of counsel
reasonably satisfactory to such Indemnified Person and the payment of the fees
and expenses of such counsel. In the event, however, that legal counsel to
such
Indemnified Person reasonably concludes and provides written correspondence
to
us, that having common counsel would present such counsel with a conflict of
interest or if the defendant in, or target of, any such Claim, includes an
Indemnified Person and us, and legal counsel to such Indemnified Person
reasonably concludes that there may be legal defenses available to it or other
Indemnified Persons different from or in addition to those available to us,
then
such Indemnified Person may employ its own separate counsel to represent or
defend it in any such Claim and we shall pay the reasonable fees and expenses
of
such counsel. Notwithstanding anything herein to the contrary, if we fail timely
or diligently to defend, contest, or otherwise protect against any Claim, the
Indemnified Party shall have the right, but not the obligation, to defend,
contest, compromise, settle, assert crossclaims or counterclaims or otherwise
protect against the same, and shall be fully indemnified by us therefor,
including without limitation, for the reasonable fees and expenses of its
counsel and all amounts paid as a result of such Claim or the compromise or
settlement thereof. In any Claim in which we assume the defense, the Indemnified
Person shall have the right to participate in such Claim and to retain its
own
counsel at its own expense.
We
agree
that if any indemnity sought by an Indemnified Person hereunder is unavailable
for any reason then (whether or not Empire is the Indemnified Person), we and
Empire shall contribute to the Claim for which such indemnity is held
unavailable in such proportion as is appropriate to reflect the relative
benefits to us, on the one hand, and Empire on the other, in connection with
Empire 's engagement referred to above, subject to the limitation that in no
event shall the amount of Empire 's contribution to such Claim exceed the amount
of fees actually received by Empire from us pursuant to Empire 's engagement.
We
hereby agree that the relative benefits to us, on the one hand, and Empire
on
the other, with respect to Empire 's engagement shall be deemed to be in the
same proportion as (a) the total value paid or proposed to be paid or received
by us pursuant to the Private Placement for which Empire is engaged to render
services bears to (b) the fee paid or proposed to be paid to Empire in
connection with such engagement.
Our
indemnity, reimbursement and contribution obligations under this Agreement
shall
be in addition to, and shall in no way limit or otherwise adversely affect
any
rights that any Indemnified Party may have at law or at equity.
The
provisions of this Agreement shall remain in full force and effect following
the
completion or termination of Empire's engagement.
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Very
truly yours,
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By:
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Xxxxxx
Xxxxxx
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Chief
Executive Officer
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EMPIRE
ASSET MANAGEMENT COMPANY.
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By:
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Xxxxx
Xxxxx
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President
& CEO
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