FINANCIAL ADVISORY AND INVESTMENT BANKING AGREEMENT
This
Agreement is made and entered into this 2nd day of
November, 2007, between vFinance Investments, Inc. (“VFIN”) and
Xxxxxxxxxxxxxxx.xxx Holdings, Inc. (OTC BB: MBKR) (“Company”).
A
glossary of definitions as used in this Agreement is set forth in Paragraph
11,
below.
The
parties hereto agree as follows:
1.
Engagement; Nature of Services:
a)
Company hereby engages VFIN as Company’s non-exclusive financial advisor to
render financial and other general advice as an investment banker, including,
without limitation, advice relating to “Transactions” and/or “Financings” and
similar matters, as may be reasonably requested by Company. In that
regard, VFIN will assist Company in identifying, analyzing, structuring,
negotiating and obtaining sources of financing for suitable business
opportunities which Company may take advantage of by purchase or sale of
stock
or assets, assumption of liabilities, merger, consolidation, tender offer,
strategic relationship, joint venture, franchise agreement, licensing agreement,
royalty agreement, financing arrangement or any similar transaction or
combination thereof. This Agreement shall not be construed as a firm
commitment or guarantee of financing which shall be on a “best efforts” basis
only. VFIN shall obtain the consent of Company prior to contacting
any potential participants in a proposed Transaction or
Financing. The decision to consummate a Transaction and/or Financing
shall be in the Company’s sole and absolute discretion, and no compensation
shall be due under this agreement unless the Company notifies VFIN in writing
that it wishes to utilizes its services.
b)
VFIN
shall not be required to undertake duties not reasonably within the scope
of the
financial advisory or investment banking services contemplated by this Agreement
or to spend any minimum amount of time in providing such
services. VFIN does not provide tax, accounting or legal
advice. Public offerings, if any, shall be subject to a separate
agreement and are expressly not addressed in this Agreement.
c)
VFIN
shall render such other financial advisory and investment banking services
as
may from time to time be agreed upon in writing by VFIN and Company (e.g.,
fairness opinions, business plans, etc.). The fees payable for any
such other services shall be customary investment banking fees to be mutually
agreed upon based upon the nature and type of such services to be
rendered.
2.
Term: Subject to Paragraph 4, this Agreement shall commence
upon execution and be effective for a period of Fourteen (14) months and may
be
terminated on thirty days’ written notice by either party to the other. If this
contract is terminated by Vfinance within first 12 (Twelve) months, Vfinance
is
not entitled to its shares and compensation.
3.
Compensation: In consideration of the services to
be rendered by VFIN hereunder, Company shall issue to VFIN “Retainer Shares”,
“Transaction Fees” and/or “Financing Fees.”
a)
Retainer Shares: Upon execution hereof, Company shall issue to VFIN fifty
thousand (50,000) shares of Company (the “Retainer Shares”). The
Retainer Shares Agreement shall contain customary terms, including without
limitation, piggyback registration rights. The Retainer Shares shall
be issued to VFIN and/or its designees.
b)
Transaction Fees: At the first closing under each Transaction,
Company shall pay to VFIN a fee (each a “Transaction Fee”) in immediately
available funds equal to five percent (5%) of the “Aggregate Consideration”
exchanged or received in connection with such Transaction; provided,
however, that any Transaction Fee due to VFIN as a result of
consideration which is contingent upon the occurrence of some future event
(e.g., an earn out or the realization of earnings projections) shall be payable
at the earlier of: (i) the receipt of such consideration, or (ii) the time
that
the amount of such consideration can be determined.
c)
Financings:
(i)
Financing Fees: At the first closing under each Financing,
Company shall pay to VFIN a fee on VFIN-introduced sources (each a “Financing
Fee”) in immediately available funds equal to the sum of one and one-half
percent (1 1/2%) of all secured debt funds available; plus four percent
(4%) of all unsecured debt funds available, plus ten percent (10%) of all
equity funds raised in amounts up to $3 million, eight percent (8%) in amounts
from $3 million to $6 million, and seven percent (7%) for amounts greater than
$
6million, in the private markets in connection with such
Financing. For purposes of calculating any Financing Fee, convertible
securities shall be treated as equity. The Financing Fee shall be calculated
on
the gross total credit facility before any deductions, including but not limited
to fees, deposits, transaction expenses, reserves, insurance or other amounts
withheld or paid by the “Financing Source.” If a Transaction results from an
introduction by the Company to a Financing Source, then fees associated with
that particular Transaction shall be reduced by half. If the funds
raised by Company pursuant to a Financing are to be received in whole or in
part
via installment payments, such installment payments shall be valued on a
discounted present value basis using a discount rate of eight percent (8%)
per
annum.
(ii)
Financing Warrants: In addition, at the first closing under the first
Financing hereunder, Company shall issue to VFIN additional warrants (the
“Financing Warrants”) to purchase such number of shares of the common stock of
Company equal to: (x) ten percent (10%) of the aggregate number of fully diluted
shares of common stock as shall have been purchased by Financing Sources
pursuant to the Financing, or (y) ten percent (10%) of the aggregate number
of
fully diluted shares of common stock into which any convertible securities
which
shall have been purchased by Financing Sources pursuant to the Financing may
be
converted (after giving effect to any increase in shares under a ratchet or
similar provision pursuant to which the number of shares initially purchased
is
subsequently increased).
The
Financing Warrants shall be exercisable for a period of five years from the
date
of issuance on the same terms and conditions applicable to, and with an exercise
price per share equal to the effective per share price paid by, Financing
Sources for a share of common stock of Company. The terms of the
Financing Warrants shall be set forth in an agreement (the “Financing Warrant
Agreement”) in form attached hereto as Annex B. The Financing Warrant
Agreement shall contain customary terms, including without limitation,
provisions for “cashless” exercise, price based anti-dilution, and customary
piggyback registration rights.
d) Transactions
and Financings of Related Entities: In calculating the
compensation payable to VFIN hereunder, the parties understand and agree that
the definition of Transaction and Financing shall be broadly construed so as
to
include any transactions and financing of Company’s subsidiaries, affiliates,
successors or other controlled units, either existing or formed subsequent
to
the date hereof.
4.
Non-renewal or Termination: Upon non-renewal or
termination of this Agreement, VFIN shall provide Company with a written list
of
parties with whom it has had discussions in connection with any proposed
Transaction or Financing. Notwithstanding any such non-renewal or
termination, VFIN shall be entitled to the compensation provided under Paragraph
3 with respect to any Transaction or Financing which shall be consummated with
any party named on such list within Eighteen (18) months following such
non-renewal or termination.
5.
Reimbursement of Expenses: Promptly following presentation of customary
documentation, Company shall reimburse VFIN for all reasonable fees and
disbursements of VFIN’s outside counsel and VFIN’s reasonable travel and
out-of-pocket expenses as incurred in connection with the services performed
by
VFIN pursuant to this Agreement, including without limitation, hotel, food
and
associated expenses including long-distance telephone
calls; provided that to the extent any such reimbursement
would cause aggregate reimbursement to exceed Three Thousand Dollars ($3,000),
such excess fees and disbursements, shall be subject to Company’s prior
approval.
6.
No Public Disclosure: Company acknowledges that all opinions and advice
(written or oral) given by VFIN to Company in connection with VFIN’s engagement
are intended solely for the benefit and use of Company and Company agrees that
no person or entity other than Company shall be entitled to make use of or
rely
upon such opinion or advice to be given hereunder, and no such opinion or advice
shall be used for any other purpose or reproduced or disseminated, in any manner
or for any purpose, nor may Company make any public references to VFIN without
VFIN’s prior written consent.
7.
Non-Exclusive Services: Company acknowledges that VFIN and its
affiliates are in the business of providing financial advisory services,
investment banking services, and consulting advice to others. Nothing
herein contained shall be construed to limit or restrict VFIN in conducting
such
business with others, or in rendering such advice to others, except as such
advice may relate to matters relating to Company’s business and
properties.
8. Reliance Upon Information: Company recognizes and confirms that, in advising Company and in fulfilling its engagement hereunder, (i) VFIN will use and rely on data, material and other information furnished to VFIN, and (ii) VFIN may rely upon such data, material and other information without any independent investigation or appraisal to verify its accuracy, completeness or veracity, except to the extent VFIN has actual knowledge to the contrary. Company represents and warrants that all such data, material and other information provided by Company will be true and accurate in all material respects and will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein not misleading in light of the circumstances under which such statements are made. VFIN shall be under no obligation to make an independent appraisal of assets or an independent investigation or inquiry as to any information regarding, or any representations of, any other participant in a Transaction or Financing, nor shall VFIN have any liability with regard thereto. If, in VFIN’s opinion after completion of its due diligence process, the condition or prospects of Company, financial or otherwise, are not substantially as represented or do not fulfill VFIN’s expectations, VFIN shall have the sole discretion to determine its continued participation in any proposed Financing and/or Transaction.
9.
Indemnification Agreement: To induce VFIN to act on behalf of Company in
connection with VFIN’s engagement hereunder, Company and VFIN are entering into
a separate indemnification agreement substantially in the form attached hereto
as Annex A and dated the date hereof, providing for the indemnification of
VFIN
by Company. VFIN has entered into this Agreement in reliance on the
indemnities set forth in such indemnification agreement.
10.
Independent Contractor: VFIN shall perform its services hereunder as an
independent contractor and not as an employee of Company or an affiliate
thereof. VFIN shall have no authority to act for, represent or bind
Company or any affiliate thereof in any manner, except as may be agreed to
expressly by Company in writing from time to time.
11.
Definitions:
a)
“Aggregate Consideration” shall mean the total consideration (i.e.,
stock, cash, assets and all other property (real or personal, tangible or
intangible) plus any debt assumed) exchanged or received, or to be exchanged
or
received directly or indirectly by Company or any of its security holders or
subsidiaries or affiliates in connection with a Transaction, including, without
limitation, any amounts paid or received, or to be paid or received pursuant
to
any employment agreement (to the extent such amounts exceed reasonable and
customary compensation for actual services to be rendered), consulting
agreement, covenant not to compete, earn-out or contingent payment right or
similar arrangement, agreement or understanding, whether oral or written,
associated with a Transaction.
Consideration
paid or to be paid other than in cash shall be valued at fair market value,
except that liabilities assumed and notes issued will be valued at the face
amount thereof. The fair market value of consideration paid in
securities for which there is a recognized trading market shall be based on
the
closing “offer” price of the securities on the day immediately preceding the
closing of the Transaction and shall be computed as if the securities were
freely tradable.
b) “Company”
shall mean Xxxxxxxxxxxxxxx.xxx Holdings, Inc.
c) “Financing”
shall mean any debt financing and/or equity investment in Company pursuant
to
which funds are received or to be received by Company, including without
limitation any lease financing, vendor financing, government sponsored financing
or any similar transaction or combination thereof. The amount of
funds raised pursuant to a Financing shall be deemed to include the total value
of “Securities” sold directly or indirectly, in connection with the Financing,
including any proceeds received by Company upon the exercise of any options,
warrants and/or similar securities; any amounts paid into escrow; and any
amounts payable in the future whether or not subject to any
contingency. For purposes of clarity, Financing shall not
include:
(x)
a “Transaction” (i.e., a transaction pursuant to which funds are received by
Company’s shareholders); or unless initiated with the assistance of, or
materials prepared by, VFIN: (y) working capital financing provided by
commercial bank loan departments; or (z) extensions, renewals or modifications
of financings or refinancings with existing creditors.
d) “Financing
Fee” is defined in Section 3(c)(i).
e)
“Financing Source” shall mean a party participating in a Financing by
being the source of funds, raised thereunder through the purchase or other
acquisition or receipt of Securities.
f) “Financing
Warrants” are defined in Section 3(c)(ii).
g)
“Financing Warrant Agreement” is defined in Section
3(c)(ii).
h) “Retainer
Shares” is defined in Section3(a).
i) “Securities”
shall mean debt, mezzanine and/or equity interests or any combination
thereof.
j)
“Transaction” shall mean any merger, business combination or
reorganization, acquisition of some or all of the stock or assets of another
company, purchase or sale of some or all of the stock or assets of Company
not
in the ordinary course of business, joint venture, strategic relationship,
licensing agreement, royalty agreement, franchise agreement, distribution
agreement or any similar transaction or combination thereof.
k) “Transaction
Fee” is defined in Section 3(b).
l) “VFIN”
shall mean vFinance Investments, Inc.
12. Miscellaneous:
a)
Entire Agreement: This Agreement and Annex A constitute the
entire agreement and understanding of the parties hereto, and supersede any
and
all previous agreements and understandings, whether oral or written, with
respect to the matters set forth herein.
No
provision of this Agreement may be amended, modified or waived, except in a
writing signed by the parties. This Agreement and the Annex shall be
binding upon and inure to the benefit of each of the parties and their
respective successors, legal representatives and assigns.
b)
Notice:
Any notice or
communication permitted or required hereunder shall be in writing and shall
be
deemed sufficiently given if hand-delivered or sent postage prepaid by certified
mail, return receipt requested as set forth below, or to such other address
as
either party may notify the other of in writing:
if
to Company, to:
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XxxxxxxxXxxxxxx.xxx
Holdings, Inc.
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00-000
Xxxxxxx Xxxx
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Xxxxxxx,
Xxxxxxx X0X-0X0
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Attn: Xxxx
Xxxxxxxxx
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Chief
Executive Officer
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if to
vFinance
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Investments,
Inc. to:
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vFinance
Investments, Inc.
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0000
X. Xxxxxxxx Xxxxx, Xxxxx 000
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Xxxx
Xxxxx, Xxxxxxx 00000
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Attn: Chief
Financial Officer
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c)
Governing
Law; Exclusive
Jurisdiction: This Agreement shall be construed in accordance
with and governed by the laws of the State of New York, without giving effect
to
its conflict of law principles. Any dispute which may arise between
the parties arising out of or in connection with this Agreement shall
be adjudicated before a court located in New York and they hereby submit to
the
exclusive jurisdiction of the courts of the State of New York and of the federal
court in the applicable district of New York with respect to any action or
legal
proceeding commenced by any party, and irrevocably waive any objection they
now
or hereafter may have respecting the venue of any such action or proceeding
brought in such a court or respecting the fact that such court is an
inconvenient forum, waive trial by jury in any such action or proceeding, and
consent to the service of process in any such action or legal proceeding by
means of registered or certified mail, return receipt requested, to the address
set forth in Paragraph 12
If
the foregoing correctly sets forth our understanding with respect
to the
foregoing, please so indicate by signing below, at which time this
letter
shall become a binding agreement.
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VFINANCE
INVESTMENTS,
INC.
By:
/s/
Xxxxxxxx
X.
Xxxx
Executive
Vice
President, Investment Banking
Accepted
and Agreed:
XXXXXXXXXXXXXXX.XXX
HOLDINGS, INC.
By:
/s/
Name: Xxxx
Xxxxxxxxx
Title: Chief
Executive
Officer
ANNEX
A
Indemnification
Provisions to Financial Advisory and Investment Banking
Agreement
(the “Agreement”) dated November 2, 2007 between
vFinance
Investments, Inc. (“VFIN”) and Xxxxxxxxxxxxxxx.xxx Holdings, Inc.
(the “Company”)
1.
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Company
agrees to (a) reimburse VFIN, its affiliates and their respective
directors, officers, employees, agents and controlling persons (each,
an
“Indemnified Party”) promptly, upon demand, for actual, out-of-pocket
expenses (including reasonable fees and expenses for legal counsel)
as
they are incurred in connection with the investigation of, preparation
for
or defense of any pending or threatened claim, or any litigation,
proceeding or other action in connection with or arising out of or
relating to the engagement of VFIN under the Agreement, or any actions
taken or omitted, services performed or matters contemplated by or
in
connection with the Agreement, (collectively, a “Claim”); and (b) to
indemnify and hold harmless each Indemnified Party from and against
any
and all out-of-pocket losses, claims, damages and liabilities, joint
or
several, to which any Indemnified Party may become subject, including
any
amount paid in settlement of any litigation or other action (commenced
or
threatened) to which Company shall have consented in writing (such
consent
not to be unreasonably withheld), whether or not any Indemnified
Party is
a party and whether or not liability resulted; provided,
however, that Company shall not be liable in respect of any loss,
claim, damage or liability to the extent that a court or other agency
having competent jurisdiction shall have determined by final judgment
(not
subject to further appeal) that such loss, claim, damage or liability
shall have been incurred solely as a direct result of the willful
misconduct or gross negligence of such Indemnified
Party.
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An
Indemnified Party shall have the right to retain separate legal counsel of
its
own choice to conduct the defense and all related matters in connection with
any
Claim, and such counsel shall to the fullest extent, consistent with its
professional responsibilities, cooperate with Company and legal counsel
designated by Company.
2.
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Company
will not, without the prior written consent of each Indemnified Party
settle, compromise or consent to the entry of any judgment in any
pending
or threatened Claim in respect of which indemnification may be reasonably
sought hereunder (whether or not any Indemnified Party is an actual
or
potential party to such Claim), unless such settlement, compromise
or
consent includes an unconditional, irrevocable release of each Indemnified
Party against whom such Claim may be brought from any and all liability
arising out of such Claim.
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3.
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In
the event the indemnity provided for hereunder is unavailable or
insufficient to hold any Indemnified Party harmless, then Company
shall
contribute to amounts paid or payable by an Indemnified Party in
respect
of such Indemnified Party’s losses, claims, damages and liabilities as to
which the indemnity provided for hereunder is unavailable or insufficient
(i) in such portion as appropriately reflects the relative benefits
received by Company, on the one hand, and the Indemnified Party,
on the
other hand, in connection with the matters as to which losses, claims,
damages or liabilities relate, or (ii) if the allocation provided
by (i)
above is not permitted by applicable law, in such proportion as
appropriately reflects not only the relative benefits referred to
in
clause (i) but also the relative fault of Company, on the one
hand, and the Indemnified Party, on the other hand, as well as any
other
equitable considerations. The amounts paid or payable by a
party in respect of losses, claims, damages and liabilities referred
to
above shall be deemed to include any reasonable legal or other
out-of-pocket fees and expenses incurred in defending any litigation,
proceeding or other action or claim. Notwithstanding the
provisions hereof, VFIN’s share of the liability hereunder shall not be in
excess of the amount of fees actually received by VFIN under the
Agreement
(excluding any amounts received as reimbursement of expenses by
VFIN).
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4.
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These
Indemnification Provisions shall remain in full force and effect
and
survive the expiration of the term of the Agreement, and shall be
in
addition to any liability that Company might otherwise have to any
Indemnified Party under the Agreement or
otherwise.
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5.
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Each
party hereto consents to personal jurisdiction and service of process
and
venue in any court in the State of New York in which any claim for
indemnity is brought by any Indemnified Person, except as provided
in
Section 12 (c) of the Agreement.
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VFINANCE
INVESTMENTS, INC.
By: /s/
Xxxxxxxx
X. Xxxx
Executive
Vice President, Investment
Banking
XXXXXXXXXXXXXXX.XXX
HOLDINGS, INC.
By: /s/
Xxxx
Xxxxxxxxx
Chief
Executive Officer