Exhibit 10.16
Brimberg & Co.
MEMBER NASD
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Tel: ▇▇▇-▇▇▇-▇▇▇▇
February 17, 2005
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President Ovation Products Corporation
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Dear ▇▇. ▇▇▇▇▇▇▇▇,
This letter agreement (the "Agreement") confirms the understanding and agreement
between Brimberg & Co. ("Brimberg") and Ovation Products Corporation ("Ovation")
as follows:
1. Ovation hereby engages Brimberg to serve as Ovation's non-exclusive
financial advisor in connection with its efforts to raise capital in a
private or public offering or to generate funds through strategic ventures
or other transactions with other companies.
2. If during the term of this agreement Ovation raises capital in a
private or public offering of its equity securities or engages in another
financial transaction with a party or parties who were first introduced to
Ovation by Brimberg, whether in a single transaction or a series of
transactions, Ovation will pay to Brimberg the following advisory fees:
(a) Cash equal to five percent (5%) of the gross proceeds to
Ovation from equity securities purchased directly or
indirectly by the investor or investors first introduced to
Ovation by Brimberg.
(b) Warrants to purchase shares of the common stock of Ovation
issued in any placement of equity securities. The number of
warrants to be issued shall equal five percent (5%) of the
number of shares of Ovation capital stock purchased by
investors first introduced by Brimberg in any equity
financing. The exercise price of such warrants shall equal the
per share purchase price paid the investors for such capital
stock. If more than one closing occurs, the exercise price of
such warrants shall equal the weighted average per share
conversion price of all such capital stock.
If Ovation issues any warrants to investors first introduced
by Brimberg in connection with a placement of equity
securities, the warrants issued to Brimberg shall contain the
same terms as the warrants issued to those investors. If no
warrants issued to investors introduced by Brimberg, then the
warrants issued to Brimberg shall provide for "full ratchet"
antidilution protection and shall expire ten (10) years from
the final closing date. Furthermore, the warrants shall be
exercisable by payment in full in cash or by so-called
"cashless exercise" provisions enabling Brimberg to pay the
exercise price by reducing the number of shares to be issued
upon exercise of the warrants.
In addition, Ovation will reimburse Brimberg for all reasonable
out-of-pocket expenses incurred by Brimberg in connection with this engagement,
whether or no Ovation successfully completes a financing, including the
reasonable fees and disbursements of its legal counsel if necessary. Brimberg
will not incur any out of pocket expenses in excess of $1,000 for any single
expense item, or $2,500 in the aggregate, without the prior approval of Ovation.
The reasonable fees and disbursements of Brimberg's legal counsel will not
exceed $10,000.
Brimberg may utilize the services of one or more qualified firms or
individuals to assist it in the performance of its obligations under this
agreement, but Brimberg shall be solely responsible for all compensation payable
to such firms or individuals for their services.
3. In the event that either party should institute proceeds to enforce any
provision of this Agreement, the prevailing party shall be entitled to recover
all reasonable expenses relating to the enforcement of this Agreement, including
reasonable attorneys' fees and costs and reasonable costs of investigation, in
addition to any other remedies. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction to be invalid,
void or enforceable, the remainder of the terms, covenants and restrictions of
this Agreement shall remain in full force and effect and shall in no way be
affected, impaired or in any way invalidated by such court action.
4. No waiver of any breach of any term hereof shall be effective unless made in
a writing signed by the party against whom enforcement of the waiver is sought,
and no such waiver shall be construed as a waiver of any subsequent breach of
that term or of any other term of the same or different nature.
5. No failure or delay by Brimberg in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any right, power or privilege hereunder.
6. Ovation hereby agrees to submit to the jurisdiction of any court of the
Commonwealth of Massachusetts or any federal court sitting in the Commonwealth
of Massachusetts for the purpose of any suit, action or other proceeding arising
out of this Agreement, or of the transactions contemplated hereby, which is
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brought by or against Brimberg. Ovation agrees that this Agreement shall be
governed by, and construed in accordance with, the internal laws of the
Commonwealth of Massachusetts without regard to the rules of the conflict of
laws of such state.
7. Ovation agrees to indemnify Brimberg as set forth in Brimberg's standard
indemnity provisions attached hereto as Addendum A.
8. Brimberg's engagement hereunder will be terminated upon the earlier of (a)
the closing of a financing by Ovation in which investors invest a maximum of
$2.0 million (unless Ovation and Brimberg elect not to terminate this
Agreement), or (b) December 31, 2005 upon written notice by either party to the
other.
9. If, during the twelve (12) month period following the termination or
expiration of this Agreement, Ovation or any of its affiliates raises capital in
a private or public offering of its debt or equity securities from any party or
parties first introduced to Ovation by Brimberg, Ovation will pay Brimberg the
compensation that would otherwise be payable to Brimberg under Paragraph 2 of
this Agreement with respect to such transaction. From time to time, Brimberg
will provide Ovation with a list of all parties introduced to Ovation by
Brimberg.
10. This Agreement may be signed in one or more counterparts, each of which
shall be an original and all of which shall be taken as one original. This
Agreement may be signed by telecopy and such signature shall be deemed an
original.
11. Brimberg acknowledges that the Company shall have the absolute right in its
sole discretion to determine whether to proceed with any financing or to accept
any individual investor.
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If Ovation is in agreement with the foregoing, please indicate such agreement by
signing and returning one copy of this Agreement to Brimberg, whereupon this
Agreement will constitute our agreement with respect to the subject matter
hereof.
Very truly yours,
BRIMBERG & CO.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇.
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇.
Title: Chief Operating Officer
Confirmed and Agreed to:
OVATION PRODUCTS CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President
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Addendum A
This Addendum A is attached to and incorporated by reference into the
foregoing letter agreement (the "Agreement"). Capitalized terms used herein and
not otherwise defined herein shall have the meanings assigned to such terms in
the Agreement.
Ovation agrees to indemnify and hold harmless Brimberg & Co. and its
affiliates, the respective directors, officers, employees and agents of Brimberg
& Co. and its affiliates, and each other person, if any, controlling Brimberg &
Co. or any of its affiliates within the meaning of the federal securities laws
(Brimberg & Co. and each other person or entity are hereinafter referred to as
an "Indemnified Person") from and against any and all losses, claims, damages,
expenses (including reasonable fees and disbursements of counsel) and
liabilities (or actions or proceedings in respect thereof) (collectively
"Losses") caused by, relating to, based upon or arising out of (i) Brimberg &
Co.'s engagement under the Agreement, any transaction contemplated by such
engagement or any Indemnified Person's role in connection therewith (all of the
foregoing are collectively hereafter referred to as the "Engagement") or (ii)
any untrue statement or alleged untrue statement of a material fact contained in
any offering materials, including but not limited to private placement memoranda
used to offer securities of Ovation in a transaction subject to Brimberg & Co.'s
engagement under the Agreement, no such materials may be amended or supplemented
(and including but not limited to any documents deemed to be incorporated
therein by reference), or caused by any omission or alleged omission to state
therein a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
provided, however, that with respect to clause (i) above, such indemnification
obligation shall not apply to any such Loss to the extent it is found in a final
judgment by a court of competent jurisdiction (not subject to further appeal) to
have resulted primarily and directly from the gross negligence or willful
misconduct of the Indemnified Person seeking indemnification. Ovation agrees to
reimburse such Indemnified Person for all expenses (including reasonable fees
and disbursements of counsel) as they are incurred by such Indemnified Person in
connection with investigating, preparing, defending, paying, settling or
compromising any claim, action, suit, proceeding or Loss, whether or not in
connection with an action in which any Indemnified Person is a named party.
Ovation also agrees that an Indemnified Person shall not have any liability
(whether direct or indirect, in contract or otherwise) the Company or its
affiliates, directors, officers, employees, agents or shareholders, directly or
indirectly for or in connection with the Engagement, except for any Losses that
are found in a final judgment by a court of competent jurisdiction (not subject
to further appeal) to have resulted primarily and directly from such Indemnified
Person's gross negligence or willful misconduct. In no event, regardless of the
legal theory advanced, shall any Indemnified Person be liable for any
consequential, indirect, incidental or special damages of any nature.
If any claim is asserted or action, suit, proceeding, or investigation is
commenced, as to which such Indemnified Person proposed to demand such
indemnification, such Indemnified Person shall notify Ovation with reasonable
promptness; provided, however, that any failure by such Indemnified Person to
notify Ovation shall not relieve Ovation from its obligations hereunder, except
as and to the extent the failure of such timely notice materially prejudices
Ovation. If Ovation so elects or at the request of an Indemnified Person,
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Ovation will assume the defense of such action, suit, proceeding or
investigation, including the employment of counsel reasonably satisfactory to
such Indemnified Person and the payment of all fees and expenses of such
counsel. In the event, however, that such Indemnified Person reasonably
determines in its judgment that representation by common counsel would be
inappropriate due to actual or potential differing interests or if Ovation fails
to assume the defense of the action, suit, proceeding or Investigation in a
timely manner, then such Indemnified Person may employ separate counsel to
represent or defend it in any such action, suit, proceeding or investigation and
Ovation will pay the fees and disbursements of such counsel; provided, however,
that Ovation will not be required to pay the reasonable fees and disbursements
of more than one separate counsel for all Indemnified Persons in any
jurisdiction in any single action or proceeding. In any action or proceeding the
defense of which Ovation assumes an Indemnified Person will have the right to
participate in such litigation and to retain its own counsel at such Indemnified
Person's own expense. An indemnifying party shall not be liable for any
settlement of any action or proceeding effected without its written consent, but
if settled with such consent such indemnifying party agrees to indemnify the
Indemnified Party from and against any Loss by reason of such settlement.
Ovation shall not settle any claim, action, suit or proceeding related to the
Engagement or the Agreement unless the settlement also includes an unconditional
release of all Indemnified Persons from all liabilities arising out of such
claim, action, suit or proceeding.
If the indemnification sought by an Indemnified Person hereunder is found
in a final judgment by a court of competent jurisdiction (not subject to further
appeal) be unenforceable, even though the express provisions hereof provide for
indemnification in such case, then Ovation shall contribute the Losses for which
such indemnification is held unavailable in such proportion as is appropriate to
reflect the relative benefits received by Ovation on the one hand, and Brimberg
& Co., on the other hand, in connection with the Engagement reflected in this
Agreement, or if such allocation is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits but the
relative fault of Ovation on the one hand, and Brimberg & Co., on the other
hand, in connection with the statements, acts or omissions which resulted in
such Losses, as well as any other relevant equitable considerations. The
respective relative benefits received by Ovation on the one hand, and Brimberg &
Co., on the other hand, in connection with any transaction shall be deemed to be
in the same proportion as the aggregate fee paid or payable to Brimberg & Co. in
connection with the transaction bears to the total value of the transaction.
Thus relative fault of Ovation on the one hand, and Brimberg & Co., on the other
hand, shall be determined by reference to, among other things, whether the
statements, actions or omissions to act were by Ovation or by Brimberg & Co.,
and the parties' relative intent, knowledge, access to Information and
opportunity to correct or prevent such action or omission to act.
Notwithstanding the foregoing, in no event shall the aggregate contribution of
all Indemnified Persons for all Losses in connection with any transaction exceed
the amount of fees actually received by Brimberg & Co. pursuant to the
Agreement.
If multiple claims are brought against an Indemnified Person in
arbitration, with respect to at lease one of which indemnification is permitted
under applicable law and provided or under the Agreement, Ovation agrees that
any arbitration award shall be conclusively deemed to be based on claims as to
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which indemnification is permitted and provided for, except to the extent the
arbitration award expressly states that the award, or any portion thereof, is
based solely on a claim as to which indemnification is not available.
The obligations of Ovation referred to above shall be in addition to any
liability which Ovation may otherwise have and shall be binding upon and inure
to the benefit of any successors, assigns, heirs, and personal representatives
of any Indemnified Person and Ovation. Neither termination of the Agreement nor
completion of the Engagement shall affect these indemnification provisions,
which shall then continue in full force and effect.
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