Jesup & Lamont SECURITIES CORPORATION NEW YORK, NY 10019
Exhibit
10.15
Jesup
& Xxxxxx
SECURITIES
CORPORATION
000
XXXXX XXXXXX
XXX
XXXX, XX 00000
TELEPHONE:
(000) 000-0000
FAX:
(000) 000-0000
November
10th,
2004
Mr.
Colorado Xxxxx
Chairman
Enigma
Software Group
00
Xxxxx
Xxxxxx
Xxx
Xxxx,
XX 00000
Dear
Xx.
Xxxxx:
The
purpose of this letter of agreement (the “Agreement”) is to confirm the
engagement of Jesup & Xxxxxx Securities Corporation (“Jesup & Xxxxxx”}
as exclusive financial advisor to Enigma Software Group, together with its
affiliates, subsidiaries (the “Company”), in connection with a prospective
Company reorganization, or recapitalization whether by way of merger,
restructuring, tender or exchange offer, or otherwise (the “Transaction”). This
letter supercedes all prior engagement agreements between the Company and Jesup
& Xxxxxx.
1. |
In
connection with its engagement hereunder, Jesup & Xxxxxx will perform
the following services as
necessary:
|
(a) |
Review
the assets and business of, as well as the prospects for, the
Company;
|
(b) |
Advise
the Company as to the timing and structure of a
Transaction;
|
(c) |
Evaluate
and recommend strategic alternatives with respect to a
Transaction;
|
(d) |
Research,
identify and analyze possible public company candidates for the Company
to
merge with;
|
(e) |
Assist
with securities attorney, auditor and other third parry advisors
on
matters relating to going public and regulatory requirements;
and
|
(f) |
Provide
such other financial advisory and investment banking services as
are
customary for similar transactions and as may be mutually agreed
upon by
the Company and Jesup & Xxxxxx.
|
2. |
The
Company shall provide full cooperation to Jesup & Xxxxxx as may be
reasonably necessary for the efficient performance by Jesup & Xxxxxx
of its services hereunder.
|
3. |
As
compensation for the services rendered, the Company hereby agrees
to pay
Jesup & Xxxxxx the following fees (the “Success
Fee”):
|
(a) |
For
services rendered regarding the analysis, identification and facilitation
of a public listing, an advisory fee of $500,000 payable in cash
upon the
execution of a share exchange agreement by the Company with a public
company. In the event that a closing does not occur with regard to
such
share exchange agreement within 5 business days of paying the advisory
fee, Jesup & Xxxxxx shall immediately return the fee to the
Company.
|
(b) |
A
success fee payable upon the closing of a Transaction of: (i) $15,000
payable in cash.
|
(c) |
Contingent
upon successful completion of an equity financing transaction of
no less
than $2,000,000 (two million dollars), Jesup & Xxxxxx shall be granted
warrants to purchase an additional 600,000 shares of the Company
on a Post
Split basis. These warrants shall have a strike price equal to the
price
paid by the investor(s) in the financing round, and extend for a
period of
5 years.
|
4. |
In
addition to any fees that may be payable to Jesup & Xxxxxx hereunder,
the Company shall reimburse Jesup & Xxxxxx for its out-of-pocket
expenses reasonably incurred in connection with its engagement hereunder,
including the reasonable fees and expenses of its legal counsel.
If any
such expenses are to exceed $2,000 individually or in the aggregate,
then
Jesup & Xxxxxx must obtain the prior approval of the
Company.
|
5. |
The
term of this agreement is for 12 months unless: (a) it is extended
by
agreement of the parties hereto; or (b) it is terminated sooner by
either
party hereto upon 30
days prior written notice to the other
party.
|
Notwithstanding
anything herein to the contrary, the obligation to pay the Fees set forth in
paragraph 3 and the Expenses as set forth in paragraph 4 above, as well as
the
provisions of paragraphs 7 and 8, shall survive any termination or expiration
of
this Agreement, except that the Success Fee shall be payable only if the Company
closes on a Transaction within 6 months after the termination of this
Agreement.
To
the
extent that, at any time during the term of this Agreement or the 18 month
period following termination, the Company determines to raise debt, equity
or
equity-linked securities via a public offering or private placement, pursue
a
merger, acquisition or divestiture, or otherwise, or require other investment
banking services, then Jesup & Xxxxxx shall have the first right of refusal,
but not the obligation, to act as the Company's exclusive placement agent,
lead
manager, financial advisor or dealer-manager, as appropriate, in each case
pursuant to a separate engagement letter which shall provide for, among other
things, mutually acceptable terms, conditions, indemnification and compensation
for such services.
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6. |
If
the Transaction is consummated, Jesup & Xxxxxx may, at its expense,
place an announcement in such newspapers and periodicals as Jesup
&
Xxxxxx may desire, subject to the prior approval of the content of
such
announcement by the Company.
|
7. |
Recognizing
that transactions of the type contemplated in this engagement sometimes
result in litigation and that the role of Jesup & Xxxxxx is advisory,
the Company agrees to indemnify and hold harmless Jesup & Xxxxxx, its
affiliates and their respective officers, directors, employees, agents
and
controlling persons within the meaning of Section 15 of the Securities
Act
of 1933, as amended (the “Act”) or Section 20(a) of the Securities
Exchange Act of 1934, as amended (an “Indemnified Party” or collectively,
the “Indemnified Parties”), from and against any and all loss, charge,
claim, damage, expense and liability whatsoever, including, but not
limited to, all attorneys fees and expenses (hereinafter a “Claim” or
“Claims”), related to or arising in any manner out of, based upon, or in
connection with (i) any untrue statement or alleged untrue statement
of a
material fact in any offering document provided by the Company relating
to
any capital raising assignment performed by Jesup & Xxxxxx on behalf
of the Company or any omission or alleged omission of the
Company to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, or (ii)
any
transaction contemplated by the engagement of Jesup & Xxxxxx hereunder
(items (i) and (ii) being hereinafter referred to as a “Matter” or
“Matters”), and will promptly reimburse the Indemnified Parties for all
expenses (including reasonable fees and expenses of legal counsel)
as
incurred in connection with the investigation of, preparation for
or
defense of any pending or threatened Claim related to or arising
in any
manner out of any Matter hereunder, or any action or proceeding arising
therefrom (collectively, “Proceedings”), whether or not such Indemnified
party is a formal party to any such Proceeding. Notwithstanding the
foregoing, the Company shall not be liable in respect of any Claims
that a
court of competent jurisdiction has judicially determined by final
judgment (in connection with which the time to appeal has expired
or the
last right of appeal has been denied) resulted solely from the gross
negligence or willful misconduct of an Indemnified Party. The Company
further agrees that it will not, without the prior written consent
of
Jesup & Xxxxxx xxxxxx compromise or consent to the entry of any
judgment in any pending or threatened proceeding in respect of which
indemnification may be sought hereunder (whether or not Jesup & Xxxxxx
or any Indemnified Party is an actual or potential party to such
Proceeding), unless such settlement, compromise or consent includes
an
unconditional release of Jesup & Xxxxxx and each other Indemnified
Party hereunder from all liability arising out of such
proceeding.
|
In
order
to provide for just and equitable contribution in any case in which an
Indemnified Party is entitled to indemnification pursuant to this Agreement
but
it is judicially determined by the entry of a final judgment decree by a court
of competent jurisdiction and the time to appeal has expired or the last right
of appeal has been denied) that such indemnification may not be enforced in
such
case, the Company shall contribute to the aggregate losses, Claims, damages
and/or liabilities in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand, and Jesup & Xxxxxx on the
other, from the Transaction. Notwithstanding the foregoing, Jesup & Xxxxxx
shall not be obligated to contribute any amount hereunder that exceeds the
amount of fees received by Jesup & Xxxxxx under this Agreement.
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The
Company further agrees that no Indemnified Party shall have any liability
(whether direct or indirect, in contract or tort or otherwise) to the Company
for or in connection with Jesup & Lamont's engagement hereunder except for
Claims that a court of competent jurisdiction shall have determined by final
judgment (in connection with which the time to appeal has expired or the last
right of appeal has been denied) resulted solely from the gross negligence
or
willful misconduct of such Indemnified Party. The indemnity, reimbursement
and
contribution obligations of the Company set forth herein shall be in addition
to
any liability which the Company may otherwise have and shall be binding upon
and
inure to the benefit of any successors, assigns, heirs and personal
representatives of the Company or an Indemnified Party.
The
indemnity, reimbursement and contribution provisions set forth herein shall
remain operative and in full force and effect regardless of (i) any withdrawal,
termination or consummation of or failure to initiate or consummate any Matter
referred to herein, (ii) any investigation made by or on behalf of any party
hereto or any person controlling (within the meaning of Section 15 of the
Securities act of 1933 as amended, or Section 20 of the Securities Exchange
Act
of 1934, as amended) any party hereto, (iii) any termination or the completion
or expiration of this Agreement with Jesup & Xxxxxx and (iv) whether or not
Jesup & Xxxxxx shall, or shall not be called upon to, render any formal or
informal advice in the course of such engagement.
8. |
This
Agreement shall be governed by and construed in accordance with the
laws
of the State of New York applicable to contracts executed and to
be wholly
performed therein without giving effect to its conflicts of laws
principles or rules. The Company and Jesup & Xxxxxx agree that any
dispute concerning this Agreement shall be resolved through binding
arbitration before the NASD pursuant to its arbitration
rules.
|
-4-
This
Agreement constitutes the entire understanding and agreement between the parties
hereto with respect to the subject matter hereof and there are no agreements
or
understandings with respect hereto which are not contained in this Agreement.
This Agreement may be modified only in writing signed by the party to be
charged. If the foregoing correctly sets forth our understanding with respect
to
the subject matter hereto, please confirm the same by executing and returning
to
us the duplicate copy of this Agreement.
Very
truly yours,
JESUP
& XXXXXX SECURITIES CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxx | |||
|
Accepted
and agreed to as of
the
date
set forth above:
ENIGMA
SOFTWARE GROUP
By: /s/ Colorado Xxxxx | |||
Name:
Colorado Xxxxx
|
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