X.X. XXXXXX & COMPANY, L.L.C.
INVESTMENT BANKING DIVISION
December 28, 2005
Xx. Xxxxx X. Xxxxx
President
CytoDyn, Inc.
000 X. Xxxxxx Xxx, Xxxxx X
Xxxxx Xx, XX 00000
Re: Financial Representative Agreement with X.X. Xxxxxx & Company, LLC
Dear Xx. Xxxxx,
This letter (the "Agreement") is to confirm the engagement of X.X.
Xxxxxx & Company, LLC (the "Agent") by CytoDyn, Inc. (the "Company") on the
above date (the "Effective Date"), for purposes of providing services as
detailed herein in consideration for the fees and compensation described below.
1.0 THE PARTIES
1.1 The Company with its principal office at 000 X. Xxxxxx Xxx.
Suite M, Santa Fe, NM
1.2 The Agent with its principal office at 0000 Xxxxxxxxx Xxxx, 00xx
Xxxxx, Xxxxxxx, XX, 00000.
1.3 The persons executing this Agreement represent to each other
that they have full and complete authority to do so.
2.0 THE AGREEMENT
2.1 The Company desires to consider selling securities (the
"Offering"). The Offering shall be on terms and conditions satisfactory to the
Company. As a result of an introduction made through Agent to an investor,
either a single investor, several investors, or a related entity (collectively
the "Investor"), should all or any part of the Offering be placed with the
Investor, the Company shall owe Agent the fees described hereof. Should the
Company close on any introduced transactions under this Agreement, it shall be
understood that the Offering met terms and conditions satisfactory to the
Company.
2.2 It is acknowledged by the Company that it has relied upon its
own advisors in evaluating all aspects of this Offering. The Company represents
that is has not relied upon any representations or statements made by Agent or
its employees concerning this Offering. Furthermore, the Company intentionally
waives and releases Agent from any and all claims or causes of action for any
losses or damages that the Company may sustain as a result of entering into this
Offering, except for loss or damages arising from failure of the Agent to abide
by the applicable laws and regulations governing the Offering.
2.3 The term of this Agreement shall be 1 year from the Effective
Date (the "Term"). Upon expiration of this Agreement, Agent shall be entitled to
receive all accrued compensation, including any unpaid Cash Fees (as defined
below), Warrant (as defined below), and un-reimbursed expenses, if any.
X.X. XXXXXX & COMPANY, LLC
0000 XXXXXXXXX XXXX 00XX XXXXX XXXXXXX XXXXXXX 00000
PHONE:000-000-0000 FAX:000-000-0000
CytoDyn, Inc.
Financial Representative Agreement
December 28, 2095
Page 2
2.4 The Company shall be under no obligation to pay any fees or
other monies whatsoever to Agent unless the purchase of all or part of the
Offering contemplated by this Agreement has closed with the Investor (the
"Closing"). If the Offering is concluded through multiple fundings or stepped
milestones, then each such separate funding shall be deemed a Closing and the
fees shall be paid to Agent at each Closing as described. The total amount of
the fee due Agent shall be due and payable on the date of Closing and delivered
simultaneous to the Agent with the delivery of the funds to the Company. The
Company shall be under no obligation to consummate any such Offering, except
upon such terms as shall be acceptable to the Company in its sole discretion.
2.5 The Company represents and warrants to the Agent that with
respect to the Offering: (i) the Company has consulted its own legal counsel on
all aspects of the Offering; (ii) Agent has not made any representations to the
Company to induce it to execute this Agreement other than those expressly and
directly made herein; (iii) the Company has performed its own due diligence
investigation and had the opportunity to ask questions of the Investor and its
management team and analyze their responses; (iv) the Company has not relied on
any information, representations or warranties of any individual or entity,
including without limitation the Agent, in connection with the Offering but for
those made directly, personally and expressly by the Investor in the definitive,
transaction documents memorializing the Offering; and (v) the Company
acknowledges that Agent has acted solely as a finder and introduced the Company
to the Investor.
2.6 Prior to introduction to any particular Investor, Agent will
first disclose the identity of the proposed Investor to the Company. The
Company, at its sole discretion, can approve or decline whether such
introduction can be made to the proposed Investor. If the Company does not
disapprove in writing whether such an introduction can be made to Investor
within 48 hours of the disclosure of an Investor by Agent to the Company, then
such inaction shall be deemed an approval. It is expressly agreed that the
Company shall promptly respond to all such introduction proposals. If approved,
any proposed Investor shall be deemed a proposed investor (the "Agent's Proposed
Investor"). Compensation shall be triggered if an Agent's Proposed Investor, or
parties referred by an Agent's Proposed Investor, invest during the Term of the
Agreement, as amended, plus 180 days. If the Company in its sole discretion
agrees to a term sheet provided by Agent via one of Agent's Proposed Investors
by mutually executing the said term sheet, the Company will grant to Agent a
60-day exclusive period from the date at which the term sheet was consummated.
3.0 THE FEE
3.1 The Company shall pay Agent a cash fee equal to 10.00% of the
gross proceeds of the Offering (the "Cash Fee") as received by the Company from
Agent's Proposed Investors. The Company shall also issue the Agent a warrant to
purchase a number of the Company's common shares equal to 10.00% of the gross
proceeds of the Offering (the "Warrant") as received by the Company from Agent's
Proposed Investors. The Warrant shall have an exercise price equal to the lesser
of the closing bid price of the Company's common stock on the day prior to the
Closing or the price paid by Investor (the "Strike Price").
3.2 The Warrant upon issuance, shall immediately vest in favor of
the Agent, be fully paid, non-assessable, and free of any restrictions on
transfer, but for those restrictions that are the result of state or federal
securities laws. The Warrant shall be issued to Agent in the form of a warrant
agreement (the "Warrant Agreement"), which shall be in a form and content
reasonably satisfactory to Agent and its counsel. The Warrant Agreement shall
provide for, among other provisions, the above terms and the following: (1) The
Warrant shall expire five years after the date that the Warrant Agreement is
issued (2) The Warrant shall have customary anti-dilution provisions for stock
dividends, splits, mergers, and sale of
X.X. XXXXXX & COMPANY, LLC
0000 XXXXXXXXX XXXX 00XX XXXXX XXXXXXX XXXXXXX 00000
PHONE:000-000-0000 FAX:000-000-0000
CytoDyn, Inc.
Financial Representative Agreement
December 28, 2005
Page 3
substantially all assets of the Company (3) Agent may exercise the Warrant at
any time after signing the Warrant Agreement (4) The Warrants shall contain a
"Cashless Exercise" provision (5) The Company shall reserve, and at all times
have available, a sufficient number of shares of its common stock to be issued
upon the exercise of the Warrant.
4.0 OTHER
4.1 Any arrangements made by the Company with any broker or other
persons with whom the Company is or may be involved are the total responsibility
of the Company. Upon payment made by the Company to Agent of Agent's fee, Agent
will hold the Company free and harmless from any and all claims, liabilities,
commissions, fees, or expenses in connection with the transaction from any party
who alleges a relationship with or through Agent and the Investors.
4.2 The Company shall also prepay or reimburse Agent for all
necessary expenses which are pre-approved by the Company, including, without
limitation, acceptable travel and lodging, printing, legal, and mailing cost,
that Agent may incur in performance of the Services under this Agreement.
4.3 The Company shall supply to Agent, logos, trademarks, slogans,
and similar designs of itself and all subsidiaries and agrees to Agent's
perpetual use thereafter in "Tombstones" that reflect the Agent's fundraising
efforts.
4.4 Either the Company or the Agent can terminate this Agreement for
any reason by providing not less than 45 days prior written notice to the other
party.
4.5 In the event of any dispute between the Company and Agent
arising under or pursuant to the terms of this Agreement, or any matters arising
under the terms of this Agreement, the same shall be settled only by arbitration
through NASD Dispute Resolution in Xxxxxx County, City of Atlanta, State of
Georgia, in accordance with the Code of Arbitration Procedure published by NASD
Dispute Resolution. The determination of the arbitrators shall be final and
binding upon the Company and Agent and may be enforced in any court of
appropriate jurisdiction. This Agreement shall be construed by and governed
exclusively under the laws of the State of Georgia, without regard to its
conflicts of law provisions. The venue shall be in Xxxxxx County, GA.
4.6 This Agreement contains the entire agreement between Agent and
the Company concerning the introduction of Investors to the Company and
correctly sets forth the rights and duties of each of the parties to each other
concerning that matter as of this date. Any agreement or representation
concerning the subject matter of this Agreement or the duties of Agent to the
Company in relation thereto, not set forth in this Agreement, is null and void.
X.X. XXXXXX & COMPANY, LLC
0000 XXXXXXXXX XXXX 00XX XXXXX XXXXXXX XXXXXXX 00000
PHONE:000-000-0000 FAX:000-000-0000
CytoDyn, Inc.
Financial Representative Agreement
December 29, 2005
Page 4
4.7 The Company agrees that upon the Closing the Agent will be paid
simultaneously with the funding of the Company from the Offering. The Company
shall include in any agreement executed by the Company with any Investor
regarding the Offering a covenant requiring Agent to be paid its fees hereunder
either from the funds held in escrow pending the Closing or directly from the
Investors in accordance with the following wiring instructions:
Account Name: X.X. Xxxxxx & Company, L.L.C.
JPT Controller: Xxxxxx Xxxx
Controller Phone: 000-000-0000
Bank: Bank of America, Buford, GA
Bank Contact: Xx. Xxxx Xxxxxxxxxx
Phone: 000-000-0000
Fax: 000-000-0000
ABA Routing #: 000000000
Account #: 0000-0000-0000
The Warrant shall be assigned to X.X. Xxxxxx Partners, LP and
mailed to the following address:
X.X. Xxxxxx Partners, LP
Attention: Xxxxxxx X. Xxxxx
0000 Xxxxxxxxx Xxxx, 00xx XX
Xxxxxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
4.8 The Company agrees to indemnify and hold harmless Agent and each
person, if any, who controls Agent within the meaning of the Securities Act of
1933, as amended (the "Act"), its officers, employees, agents, and the Agent's
counsel (collectively, the "Agent and its Personnel") from and against any
losses, claims, damages or liabilities, joint or several (which shall, for all
purposes of this Agreement, include, but not be limited to, all reasonable costs
of defense, investigation and collection and all attorneys' fees), to which
Agent and its Personnel may become subject, under the Act or otherwise, insofar,
as such losses, claims, damages or liabilities (or actions in respect thereof);
(i) arising out of or are based upon any untrue statement or alleged untrue
statement of any material fact made by the Company its officers, employees,
agents, and the legal counsel; (ii) arising out of or are based upon any
omission or alleged omission of material fact necessary to make any statement
not misleading, made by the Company its officers, employees, agents, and its
legal counsel.
X.X. XXXXXX & COMPANY, LLC
0000 XXXXXXXXX XXXX 00XX XXXXX XXXXXXX XXXXXXX 00000
PHONE:000-000-0000 FAX:000-000-0000
CytoDyn, Inc.
Financial Representative Agreement
December 28, 2005
Page 5
If the foregoing is in accordance with your understanding,
kindly confirm your acceptance by signing and returning the Agreement, which
will thereupon constitute an agreement between us.
Yours very truly,
Xxxxxxx X. Xxxxx
Managing Director
X.X. Xxxxxx & Company, LLC
Accepted and approved this_________day of ________, 2005
By:________________________________
Xx. Xxxxx X. Xxxxx
President XxxxXxx, Inc.
X.X. XXXXXX & COMPANY, LLC
0000 XXXXXXXXX XXXX 00XX XXXXX XXXXXXX XXXXXXX 00000
PHONE:000-000-0000 FAX:000-000-0000
